Major components for Whale Awakeä, such as the circuit board and the molded plastic nose cone, will be subcontracted to outside suppliers in order to keep our capital investment costs low. The components and other raw materials will be shipped to an assembly shop in southern New Hampshire. This region was selected because of its proximity to our customer base and the many unemployed assembly operators desperate for a job opportunity in the area.
The assembly operation will consist of preparing the outer casing, attaching and inserting the signal device, circuit board and power source. Once assembled, the unit is filled with a special polymeric filler and sealed closed. Production will run for about eight months per year and ramp up to meet spikes in August and September caused by the cyclicality of demand (please see Figure 8). Eight hourly employees will be required to staff the operation during the peaks in the production schedules. The hourly employees will be hired on a temporary basis. Tins will keep costs low by avoiding the cost of fringe benefits and allowing the head count to fluctuate with demand. Since this is a simple assembly operation, there will be no need to retain any highly skilled or highly trained operators. Estimated costs of production are as follows:
|Packaging and Shipping||$1.00|
|Total Variable Cost||$7.35|
The manufacture of the control circuit boards is anticipated to be with an electronics subcontracting unit in order to reduce labor costs and, therefore, piece price. Orders will be placed for monthly batches with an expected lead time of eight weeks. Shipping and duties are included in the total material cost. The out-sourcing of the plastic nose cone will be less complicated and could be contracted with a local injection molding company. Lead times and batch sizes will be smaller, but there will be the requirement of a small investment for tooling. Overall, the choice of subcontracting the major components will keep capital expenses for equipment at a minimum.
Future expansion of capacity will not require any considerable investment other than additional fixtures and increased floor space for materials storage. Ramping up production to meet unexpected demand will be dependent on the ability of subcontractors to meet the new requirements, therefore contingencies for these circumstances will be included in the contracts.
|Table of Contents||Appendices|
0. Executive Summary|
1. Product Description
2. Market Need
4. Future Opportunities
7. Financial Overview
Advertising & Promotion
Market Size & Profits
|©1993 Independence Marine|