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... fe working of the engine. This was manufactured in house by the fabrication unit. o The fuel tank of the car was very big in size.
Therefore a fuel tank was required for holding compressed hydrogen, which would consume less volume and space. This was possible by making the fuel tank of special alloy metal, which was made in the fabrication workshop itself. o The fuel stations had to be set up across the country. This required Volkswagen to set up hydrogen stations, which would attract more sales of the new Hybrid car. o The car had to be made in a way that it used dual fuel. One fuel tank with hydrogen and one with petrol.
This required for the manufacture of additional fuel injection technology and the car was appropriately named as "Hybrid." This was done in house. o The work in progress time in the manufacture of the car had to be reduced. This meant changing the layout of the factory and applying proper logistics techniques in the production process. o Maintenance concept: & # 61680; The system maintenance concept includes providing the customers with free replacement warranty on the spare parts for 1 year and 1 -year insurance free. Apart from this, the onsite checking and overhauling for first seven servicing would be free. o Identifying and categorizing life cycle activities: & # 61680; The life-cycle activities for the Volkswagen system are classified as below: o Design of the hydrogen engine: the hydrogen cylinder internal combustion engine is first design, developed, and simulated to check for the workability of the same.
A feasibility study is made for the hydrogen-fuelled car. The conceptual design stage covers the feasibility study, the system operational requirements and functional analysis. The preliminary system design covers the system operation and maintenance functions, allocation of requirements. o Production of the car: The production phase involves the change in the production process in order to accommodate the additional setup for producing the hydrogen cylinder. Change in the layout of the workshop floor and the process line is made in order to reduce the work in progress time and reduce inventory cost. o Operation and support: The car will be launched with the new name of Hybrid.
There will be promotions and advertising done for the car. The operation phase will see the running of the car and the demand for the car. 2. Alternative-B: The alternative B is for the subcontracting of the parts and services: o Operational requirements: The subcontracting of the parts and services will require a different operational requirement from the one above. The main operational requirements are: o The delayed entry valve was manufactured by giving it for subcontracting to other firms. This meant that no change was made to the existing layout of the process line for manufacturing the engine assembly line. o The special alloy fuel tank was outsourced.
This saved the cost of setting up a unit for the fabrication of the special alloy metal and the high-pressure hydrogen cylinder. o The setting up of the fuel station was done in partnership with the other petroleum companies, which saved a lot of cost of building up infrastructure. o The duel fuel set-up was outsourced o There was no change in the work-in-progress time because of the outsourcing of the work. o Maintenance concept: The maintenance concept for the outsourcing job was to provide third party warranty for the spare parts and the insurance will be of 2 years.
There will be no free servicing. o Life cycle activities: The life cycle activities for the subcontracting of parts is as follows: o Design: The design phase is similar in both the alternatives o Production: Due to subcontracting of the parts, the layout of the industry was not changed. This meant the existing layout was not disturbed. o Operation stage: the operation stage would remain the same in the both alternatives. 4. 1. 1. 1 Cost breakdown structure: The cost breakdown structure shows the elements of the cost in the system.
The three main elements of the cost are show below. 4. 1. 1. 2 Life cycle Cost collection worksheet: Program activity and cost designations Individual cost. Alternative A Alternative B Research and development cost o System product management (Crm) 645, 000 651, 000 o Product planning (Crp) o Engineering design (Cre) o Design data (Crd) o System test and model development (Crt) Investment cost o System product management (Cpm) 785, 000 700, 000 o Industrial engineering and operations analysis (Cpi) o Manufacturing (Cm) o Infrastructure cost (Ci) o Quality control (Cpq) o Logistics support cost (Cl) o Subcontracting cost (Cs) Maintenance cost o Operations cost (Co) 420, 000 430, 000 o Distribution and transportation cost (Ct) o Unscheduled maintenance (Cum) o Maintenance facilities (Cmf) o Maintenance personnel training (Cpt) o Test and support equipment (Cts) o System equipment modifications (Ce) o System phase out (Cpo) Others Co 100, 000 90, 000 TOTAL 1950000 1871000 The total cost, which is affecting the company by the two alternatives, is studied in the table above. The table states that the alternative B is the one, which is a cheaper option. The outsourcing of the parts which is manufactured and the services, which are developed like setting up petrol stations, have cheaper investment cost. The maintenance cost for the alternative A is better, but when the overall cost factor is compared the alternative B, that of outsourcing the manufacturing of parts, is a cheaper option and the Volkswagen group will go with that option.
The cost incurred in the successive years by the company for the reengineering is shown in the table below: ALTERNATIVE YEAR 2 YEAR 3 YEAR 4 TOTAL Alternative A 1950000 1900000 1880000 1890000 Alternative B 1871000 1852000 1862000 1880000 The alternative B has a higher chance of being selected based on the above table. The sales for the Hybrid can be shown on the bar chart. The sales in the 1 st year of the car in the intial stages were poor. Number of factors had an influence on this.
The car was just picking up the market and the people were getting aware of the existence of the car. There were no hydrogen pumps, as much as to support large number of sales of the car. The sale of the car gradually picked up and in the 4 th year the sales was reached the maximum. The Hybrid was priced at 96000 AUD. The company reaches the breakeven point at 2500 vehicles in the 3 rd year. Number of cars Duration in years 4. 1. 1. 3 BREAK EVEN ANALYSIS: Profit line 140 Profits -- > 120 Variable cost line 100 80 60 Fixed cost line 40 20 1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th 9 th years& # 61664; The break-even analysis is done on the sales and the profit.
The Hybrid was priced at 96000 AUD. the company got about 56000 profit from it. Thus the break-even chart shows the break-even point in the year 3 rd around 59 million. For the company to make a profit of 59 million it had to sell around 1053 units. This occurs somewhere around the start of the third year.
The fixed cost associated with the system is given below: o Cost of rent and rates. o Cost of machineries o Cost of depreciation o Cost of research and development, testing and model making units and market survey etc. o Cost of marketing. o Administrative costs. The direct and indirect variable costs associated with the system are as follows: o The raw material cost o Inventory handling cost o Labour and services cost o Maintenance cost. 4. 1. 2 RISK ANALYSIS: The life cycle costing done on the two alternative approaches of the system gives the option of choosing the alternative B. The alternative B chooses to subcontract the parts rather than producing i...
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Research essay sample on Break Even Analysis Fuel Tank
