BMX Cycle Case Analysis

Market & Benefit Analysis

Total Market BMX demand 1986/88 580,000 48,000 8.3% 1992 1,000,000 82,759

Price 1200 BMX cycles 4000 BMX cycles 1,200 1,200

COGS 1,100 1,020

Total GM per month 119,520 720,000 Benefit

Total Annual GM 1,434,240 8,640,000 7,205,760

Process Flow Chart

Handle Shop BB Shell Shop Rim Shop Electroplating Shop

Press Shop

Cutting Shop

Welding Line

Saddle, Break & Hub Shop

Final Assembly Area

Machine Shop

Enameling & Phosphating Shop

Enameling and Phosphating Shop

Cycle time (min)/ jig Pieces Needed Each Day 160 160 160 160 160 160 160 160 Time (min) Jigs needed needed for per day required demand 20 40 14 20 18 18 10 8 10 100 35 50 45 45 25 20 330

Item

Pieces/jig

Frame Handle Front Fork Seat pillar disc/ Chain disc Handle stem Upper bracket Seat clamp

8 4 12 8 9 9 16 20

0.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5

Rim Assembly
Demand per month Current Daily Production Required Production Ratio Required Daily Production Required staff per shift Available staff per shift Possible in 2 shifts Need to outsource Total Market 8,000 197 100% 320 4.74 5 394 14 Plastic 4,800 140 60% 192 1.37 2 280 0 Steel 3,200 57 40% 128 3.37 3 114 14

Cost Analysis
Total current labor cost/ month = Rs. 528,000
240 FT @ 1700/month = 408,000 120 DP @ 40/shift = 120,000

New welding line = Rs. 1,000,000 Outsourcing Rim Assembly (14 per day)
14 x 5 x 25 = Rs. 1,750 Current cost of in-house assembly (19 @ Rs. 40)
Rs 2.11 per rim

Qualitative Analysis
Production planning for colors needs improvement
Use weekly production figures Minimize setups

Keep turnover minimum to develop skilled workforce Market is going to increase further Subcontracting