Design of a Specialized Portable Golf Vehicle - Case Study Example

The University of Greenwich School of Engineering Group Design Project 2012/13 Design of a specialized portable golf vehicle Design of a specialized portable golf vehicle The design of the specialized portable golf vehicle will bring out a self-propelled golf cart that is light-weight, and that can be carried around by one person with the capacity of one golfer, space and carrying capability for a golf bag and associated golf clubs. The finance and cost of the specialized portable golf vehicle will be determined by the overall cost of design and manufacturing process. The design of the specialized portable golf vehicle gives the blue print of all the parts of light-weight golf vehicle; the body having been made of aluminum, two-seated, a powerful gasoline engine and strong brakes for navigation of hills. The success of the prototype gives the go-ahead to the next stage of manufacturing. Finance and costs of the development of the prototype will be less than the real vehicle due to the use of materials of a lower quality than the original quality. This is so because the prototype is meant for testing and not rolling out to the market (Hallum, 2004). The cost of manufacturing will comprise the cost of the raw materials used, and the manufacturing process itself. The raw materials will include tubing, steel plates and rods for the frames, aluminum for the body, and plastic components to be assembled in to the vehicle. This choice of materials will ensure a light-weight specialized portable golf vehicle that will meet the needs of the consumer. Other raw materials’ costs to be taken in will be those of components such as tires made of rubber, steering mechanisms, seat cushions made of foam cushion covered by vinyl, brakes, motors, transaxles, drive trains and suspensions (Shim & Siege, 2000). The manufacturing process will begin with floor and body panel fabrication, in this case made of aluminum. It will then be followed by chassis construction and painting. Transaxle assembly then follows which entails fitting the left and right side of the transaxle housing with bearings, seals, gears, and axle housings. Transaxle and chassis assembly is followed by the installation of components such as the steering wheel, body panels, the motor, gasoline engine, belts, transaxle, brake pedal, break cables, accelerator pedal, accelerator cable, CV transmission, and fixtures and seat cushions installations and storage baskets (Hallum, 2004). The cost-volume-profit analysis will give guidance on the point where total revenues equal totals costs inclusive of both variable and fixed costs. The price to be set for the exceptional golf vehicle will be reasonable yet enough higher than the outlined expected costs so as to cater for reasonable variations in the volumes of sales, generate revenue for investment, and remain within the confines of what consumer would consider to be a fair price (Korn & Rorn, 2001). The two common types of expenses to be incurred in the design and probable manufacture of the specialized golf vehicle are the fixed expenses and variable costs. Variable costs are related directly to sales; they change with sales such that if the sales of the golf vehicles go up, the variable costs also go up and if the sales go down, the variable costs go down. The variable costs comprise of labor costs and materials that change alongside sales. Examples of variable costs in the case of specialized golf vehicle production are the raw materials, the labor required in the process of manufacturing, and employee wages (Shim & Siege, 2000). Fixed costs would be those that would be associated with the specialized portable golf vehicle that will have to be paid regardless of the sales volume. Payment of the fixed cost is mandatory regardless of the volume of sales, whether meager or massive. Examples of fixed costs to be incurred in the event that the manufacture of the specialized golf vehicle takes off is the depreciation of equipment used in the manufacturing process and overhead including the rent for space required for occupying during the manufacturing processes (Dewey, 2000). The semi-variable costs would also be incurred in the process. This will entail those components containing both variable and fixed cost aspects. These parameters have effects on the net profit that the company would be foreseeing in this project. The fixed, variable, semi-variable and volume of sales have direct effects on the net profit (Dewey, 2000). Pricing the specialized portable golf vehicle will also be affected by direct and indirect costs. Direct costs can easily be traced back to an exact object such as raw materials and labor in the production process. Direct materials comprise of those materials that are specifically identified with the product such as raw materials while indirect materials such as tools that are used in the production process to facilitate the process (Korn & Rorn, 2001). Indirect costs on the other hand are those that would affect a company in its entirety, such as depreciation, advertising costs, general supplies and services such as accounting that affects the entire company. A clear identification of these costs is critical since overhead and indirect costs are tax-deductable items (Dewey, 2000). The price analysis methods to be considered are value-based pricing, cost-plus pricing, target-return pricing, psychological pricing and fair pricing. Value-based pricing will entail setting the price for the golf vehicle basing it on the value that it will create to the customer. Charges would be made on a variable scale according to the results achieved by using the golf vehicle. The customer in such a case will gladly pay for the results that this product will give, which is what the customer is looking for (Dewey, 2000). Cost-plus pricing involves setting the price at the production cost inclusive of goods cost and fixed cost at the current volume plus a certain margin of profit. Target return pricing is setting the price with an objective of achieving a target return on investment while psychology pricing will necessitate taking in to consideration the perception of the consumer toward your price. When it comes to fair pricing, neither the value of the product nor competition is a major factor, but simply a limit within which the consumer would consider fair (Shim & Siege, 2000). The pricing of the specialized portable golf vehicle will take the factors above in to consideration so as to arrive at an ideal price. Below is a table containing the list of components for purchase for the manufacture of the specialized golf vehicle. BRAKES, CABLES, SPRINGS BATTERY PARTS BEARINGS BELTS BODY PANELS, CARBURETOR, INTAKE & FUEL PUMP CLUTCHES AND CLUTCH PARTS CONTROL CABLES & PARTS DIFFERENTIAL PARTS ELECTRIC MOTORS & MOTOR PARTS ENGINE PARTS (GAS) FORWARD / REVERSE SWITCHES FILTERS, SPARK PLUGS & IGNITION FRONT SUSPENSION MUFFLERS & MOTOR MOUNTS TRANSMISSION/DIFFERENTIAL REAR SUSPENSION, REAR AXLES SHOCKS SOLENOIDS SPEED CONTROL, RESISTOR TYPE SPEED CONTROL, ELECTRONIC STARTER - GENERATOR PARTS STEERING PARTS STOP SWITCHES WHEELS AND TIRES (Hallum, 2004) The make or buy decision has always been a valid business concept. The concept helps in defining the feasibility of a project and its profitability; whether it will be viable or not. The procure policy embraces the make or buy concept under which a decision is made with the factors of volume, per-unit cost when buying, per-unit direct cost when making and the fixed cost of making, in to consideration. The two formulae that are used are the cost-to-make (CTM) and cost-to-buy (CTB) formulae (Dewey, 2000). CTM=fixed costs + (per-unit direct cost x volume). CTB=volume x per-unit cost when buying. The decision to make the specialized portable golf vehicle would be considered because of the following reasons: lack of competent supply in the market, reduction of costs of logistics, concerns of quality control, small volume that may not necessarily attract a supplier, organizational pride, and back-up source maintenance (Dewey, 2000). The team therefore considers the pros and cons between buying and making and finally decides on the route to be taken. In the case of the specialized golf vehicle, the team is putting together a special design of the golf vehicle to meet the specified needs of the customer; this thus translates to the possibility of current unavailability of a specialized portable golf vehicle that could perfectly match the outlined needs (Dewey, 2000). The make or buy process will entail various stages of preparation, data collection, data analysis, and feedback. Make or buy decision is among the vital techniques for practices of management. A decision made on make or buy that creates a high impact always follows a laid-down process. This ensures transparency and decisions being made for a company’s best interest (Arditti & Moore, 2008,) A procurement procedure will give a guarantee of the widest possible economic operators’ participation, ensure transparency in operations and obtain the quality of works and supplies that are desired. The procurement rules give clear outlines on tendering condition, the capacity to perform any given contract and selection criteria. And tender evaluation and participation (Clarke & Temple, 2004). References Arditti, d., & Moore, P., 2008, Setting-up a small observatory from concept to construction, New York, Springer science. Clarke, P. F., & Temple, E. M. F., 2004, Public procurement policy, Harlow, Essex, United Kingdom, Longman Information & Reference. Dewey, D., 2000, Microeconomics: the analysis of prices and markets, New York, Oxford University Press. Hallum, D., 2004, ‘Fabricator tees up with golf-car redesign’, Welding. Design and Fabrication, vol. 67, pp.25-27. Korn, R., & Rorn, E., 2001, Option pricing and portfolio optimization: modern methods of financial mathematics, Providence, R.I., American Mathematical Society. Shim, J. K., & Siegel, J. G., 2000, Modern cost management & analysis, Hauppauge, N.Y., Barron's Educational Series. Read More