343

Cost Benefit Analysis of Injection Mould Manufacturing Techniques Used in Local SME Sector 1

Cost Benefit Analysis Of Injection Mould

Manufacturing Techniques Used In Local SME
Sector
K. H. Janaka Mangala# De Silva B.T.S.*, Jayaweera C.S.+, Perera O.S.N.
Department of Mechanical Engineering,
University of Moratuwa, Sri Lanka
#
Email: [email protected]
*Email: [email protected]
+
Email: [email protected]

Email: [email protected]
Telephone: +94-11-264 0460, Fax: +94-11-265 0622

AbstractSME sector mould users in Sri Lanka are in need

of a proper selection method for moulds. At the moment the
selections is mainly based on the mould cost. Apart from the
direct mould cost there are various other cost factors that need
to be carefully analyzed which are hidden for ordinary mould
users. Unavailability of proper cost benefit analysis methods Low Price Poor mould quality
often put the SME sector mould users in difficult situations as
their actual cost would be doubled that of the estimated cost. (Low quality mould) (High wastage)
This paper attempts to reveal the problems in this area and
proposes a method for cost benefit analysis that could guide the
mould users in selecting their moulds & related manufacturing
methods.
We introduced an innovative method called Cost Points
Method to facilitate the cost analysis in a user friendly High losses
manner. The facts & figures present in this paper are based on
industrial surveys and a case study carried out with the SME (Low mould demand)
sector.

I. INTRODUCTION
Fig. 1. Low cost cycle.

I NJECTION moulding process is the most common in plastic

product manufacturing in local SME sector. From 1993 to
2005 the total mould import has increased from 45% to
Our industrial survey revealed that none of the mould
users carried out a cost benefit analysis when selecting a
75%. According to those past surveys the major cause for manufacturer. In our research, we achieved a way to carry
this problem is nonexistence of a proper cost benefit out a proper cost benefit analysis when purchasing a mould
analysis by the SME mould users when selecting a mould. as well as a case study to rectify main problems found in the
We did this project to reveal this matter in deep and to find survey.
an optimum solution.
Since the cost is the major concern when selecting a
mould manufacturer it affects the quality of the mould. Then II. INDUSTRIAL SURVEY
due to poor quality and high wastage, mould users incur
losses that might not be considered before. This leads to A. Industrial Survey
reduction of demand for the moulds. Due to this cycle both An industrial survey was carried out including twelve
parties incur losses. This has shown in the proceeding Low companies, comprise of mould users and manufacturers. In
cost cycle figure. the graph, label both refers the group who manufactures
their moulds by them selves and uses those moulds to
produce plastic items.
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Cost Benefit Analysis of Injection Mould Manufacturing Techniques Used in Local SME Sector 2

Overall Satisfaction
Manufacturers only
17% 1
0. 0.
9 8
0.
8
0.
7
Imported
0.
6 Sri Lankan
0.
5 0.
0.
4 3
Both 33% Mould users 0.
3
only 50% 0.
2
0.
1
0
Fig. 2. The industrial survey. 0.0
5

50% of those users imports mould from India. None of

0.
them mentioned that lead-time is a problem even if they 6
0.
import it. Actually, it took 40% to 50% of time taken to 8
Maintenance cost 1 Lead time
manufacture moulds in Sri Lanka, including the time taken
to test the moulds too. Other 50% of users said that the lead-
Fig. 3. Comparison between imported and locally made moulds
time is a main factor and they are not happy with the current as seen by the mould users
local status. This has been a crucial issue to increase mould
imports.
Survey revealed that the mould users mould imports III. GENERAL STRUCTURE ( COST POINTS METHOD)
depend on one or two selected suppliers. This has happened A main factor that revealed in the survey was none of the
due to dissatisfaction on local mould manufacturers in the mould users carrying out a cost benefit analysis when
past and fulfillment with the current mould suppliers. But purchasing a mould. Figure below shows the response for
now the situation is much better. The current technology the question When you purchase a mould do you carry out
and skills of the manufacturers were developed to fulfill the any cost benefit analysis.
mould demand. However those users, who get used to that
situation, are not updated about the current mould
manufacturing capabilities of Sri Lanka. This leads to keep 0
10 10
them away from Sri Lankan skilled manufacturers.
According to the survey, for 83% of the mould users,
mould price is the key issue when selecting a manufacturer.
This has been the next key issue to increase mould imports.
However, if those 80% of mould imports were locally
manufactured, then it would be a major cause to decrease
the prices in Sri Lanka.
30% 50
100% of the mould users, who exports plastic products
directly or indirectly, have their own manufacturing
Complete analysis
facilities. This means that, the quality achievement of local Cost with
manufacturers is up to the standards but most of the users Cost with lead
are not well aware about the current capabilities. However, Only a cost
justification
Not at
survey exposed that only 33% of SME manufacturers are Fig. 4 Level of cost analysis
with specialized knowledge in mould making field. This
might be the reason for unawareness about cost reduction This leads to serious problems as given in the
methods without sacrificing the quality. introduction. Several cost benefit analyzing methods were
Only up to 5% of mould users use advanced technologies tried but failed due to following main reasons.
like hot runner moulds, computer aided designs due to high Due to none well established market conditions
initial costs. there is a large cost variation from one mould to
Figure below shows the comparison of average another.
satisfaction of mould users on overall satisfaction on There are some cost components that can not be
manufacturer, satisfaction on lead time and maintenance accounted directly.(Losses due to lead time)
cost before completing the targeted production between Problems arouse when costing future cost
imported mould users and local mould users. components.
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Cost Benefit Analysis of Injection Mould Manufacturing Techniques Used in Local SME Sector 3

So we introduced an innovative method called cost According to the users experience these vary from mould
points method to overcome those matters. This Facilitate, to mould. But base on a particular mould user can decide the
to take an optimum decision when selecting a mould at the cost points to quantitative components. This is done as a
beginning. This method considers all the cost components percentage of each mould cost points. For example let us
rather than considering cost only. consider mould rework cost. For locally made Mild Steel
mould (MS mould) the cost points are given as 15% of the
A. Step one- Initializing Cost Components
particular mould cost points. This percentage varies from
First we identified all the cost related components that 10% to 20% and the user allows choosing a value with in
might come in the future. It includes costs that occurs from the range.
the beginning of the purchase, to fulfill the required As an example for qualitative cost components, cost
predicted demand and, categorized them in to two points for losses due to lead time predicted as follows.
categories, quantitative items and qualitative items.

TABLE 1
COST COMPONENTS AND CATEGORY
Cost component Category
Mould purchase cost Quantitative
Transportation cost Quantitative
Mould rework cost Quantitative
Maintenance cost Quantitative
Losses due to lead time Qualitative
Production losses due to mould failure Quantitative Fig. 5. Lead time vs. cost points. Note that cost points are taken as a
Machine wear cost Quantitative percentage of particular mould.
Machine idle time cost Quantitative
Cost of rejected parts due to mould Quantitative Here range can not be given exactly but user can find the
failure relevant range.
Rework cost of the product Quantitative D. Step Four- Addition of cost points for each mould
Loss of good will due to low quality Qualitative After considering each and every cost components user
items can add them together separately and find the total cost
Labour costs Quantitative points for each mould. Let Mc1 got 428 points; Mc2 got 400
Cooling water supply cost Quantitative points and Mc3got 560 points. Then since Mc2 got the least
cost points it would be the optimum solution.
B. Step two- Assigning Cost Points Even though this method does not give a perfect answer,
The next thing was assigning cost points (cp) to each and in practice it gives a good relative prediction among the
every cost components including initial mould cost. selected options. That is the really needed in this field. The
For example, let a user has 3 different choices, mould other advantages of this method are
cost1 (Mc1), mould cost2 (Mc2), mould cost3 (Mc3) when It is simple and practically can be used.
selecting a mould according to his requirement. User can select points with in the ranges or he
Mc1 = $ 10,000 (initial cost) can change the ranges according to his past
Mc2 = $ 15,000 (initial cost) experiences.
Mc3= $ 20,000 (initial cost) Special cost components that might miss in the
method can introduce.
Let 10,000 + 15,000 + 25,000 = 1000 cp
Cost points for mould 1 (Mcp1) = 200 cp Nevertheless, this method can expand to other industrial
Cost points for mould 2 (Mcp2) = 300cp areas that need more accurate predictions in an analyzing
Cost points for mould 3 (Mcp3) = 500cp manner.

C. Step three- Assigning cost points to other cost IV. CASE STUDY
components A comparison of conventional three plate mould with a
After defining cost points to each mould option the next hot runner mould was carried out successfully with the aid
step is to assign cost points to other cost components. of a SME mould user. In the case study to compare the three
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Cost Benefit Analysis of Injection Mould Manufacturing Techniques Used in Local SME Sector 4

plate mould with a hot runner mould with same number of Cost of production Hot Runner Vs Cold Runner
cavities we considered the following factors.
500

Cost of production per 1000 item s

450
TABLE 2
400
PARAMETERS USED IN THE CASE STUDY
350
(i) Price of raw material [A] Rs/g 300
(ii) Production per year [B] 250
(iii) Time of filling order [C] yrs 200

(iv) Weight of part [D]g 150

(v) No. of cavities [E] 100

50
(vi) Wages [F] Rs/hr
0
(vii) Cycle time [G] s 0 5000 10000 15000 20000 25000 30000 35000 40000

(viii) Energy costs for 1000 items [H] Rs No.of items produced per year in 1000s

(ix)Weight of runners [I] g Cost ofproduction CR Cost of production HR

(x)Cost of regrind for 1000 items [J] Rs

(xi) Price of the mould [K] Rs Fig. 6. Number of items produce per year vs. cost of production per
thousand items. Note that cost is given in rupees.
(xii) Maintenance cost per year as a [L%]
percentage of mould cost
From the above graph we can see that for a production of
(xiii) Interest rate [M%]
more than 20 million parts per year hot runner system is
more economical than a cold runner system. The users
In addition to these factors there are some other factors
production per year is 30 million parts therefore definitely a
which should be considered in a general analysis
hot runner system is more economical.
(xiv) Sale price of regrind materials [N] Rs/g
(xv)Machine size. [P] kN-Cm3
V. CONCLUSION
(xvi) Machine costs [Q] Rs/hr
This research project data is most suites in Sri Lankan
For the cases where the regrind material are sold the price context. However, the methodology we achieved, the
of regrind is important as the user we selected completely general Structure, cost points method and the approach to
reuse the regrind material we didnt consider it, for a hot the case study can utilize in other industries in general. . It is
runner mould with same number of cavities the a smaller better to have more collaboration between mould users and
machine with lesser clamping force and lesser plasticizing manufacturers. Because, mould users technical knowledge
rate then the machine costs per hour will also be different. is not up to the standards and there should be a proper
In a hot runner system labour involvement is lesser as the method to exchange information among them.
sorting of parts from runner system, manual degating and Both Sri Lankan mould manufacturers and users are
regrinding are eliminated in a hot runner system. reluctant to go for advanced technologies due to the high
costs. In our research we were able to introduce a decision
support system to facilitate mould users. But still theres a
Computation for 1000 items requirement for a low cost decision support system to
facilitate mould manufacturers in mould design and
1. Material Costs = (A D) + (I E ) (A - N) manufacturing.
(F + Q)G
2. Manufacturing costs = + (H + J)
3.6E ACKNOWLEDGMENT
K{(1 C) + L + M} 1000 We are eternally indebted to Dr. U. P. Kahangamage,
3. Mould costs =
B Senior Lecturer of University of Moratuwa- Department of
Mechanical Engineering without whom this exercise would
From the above analysis we obtained the graph below. have been a mere pipe dream. We also extend our sincere
gratitude to Mr. Sarath De Silva, Proprietor of Richard Auto
Engineering Works, Welisara, Mr. Rex Perera, proprietor of
A. R. P. Plastics, Ragama for their technical assistance.
Finally, we would like to thank the staff of the
Department of Mechanical Engineering and all others,
whose corporation and inspiration went a long way in the
successful completion of the project.
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Cost Benefit Analysis of Injection Mould Manufacturing Techniques Used in Local SME Sector 5

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