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    Make or Buy Decision: Resource Management (Cem) M. T - S - Ii C E & M

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    xjsddjwef
    This document discusses make or buy decisions for two construction materials: binding wire and AAC concrete blocks. For binding wire, making it in-house would cost Rs. 9,39,360 compared to buying it for Rs. 10,10,000, a cost savings of Rs. 70,640 or 7%. For AAC blocks, making them in-house would cost Rs. 14,76,50,000 compared to buying them for Rs. 16,00,00,000, a cost savings of Rs. 1,23,50,000 or 7.71%. Based on the lower costs, the document recommends making both materials in-house.

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    Make or Buy Decision: Resource Management (Cem) M. T - S - Ii C E & M

    Uploaded by

    xjsddjwef
    55 views6 pages
    This document discusses make or buy decisions for two construction materials: binding wire and AAC concrete blocks. For binding wire, making it in-house would cost Rs. 9,39,360 compared to buying it for Rs. 10,10,000, a cost savings of Rs. 70,640 or 7%. For AAC blocks, making them in-house would cost Rs. 14,76,50,000 compared to buying them for Rs. 16,00,00,000, a cost savings of Rs. 1,23,50,000 or 7.71%. Based on the lower costs, the document recommends making both materials in-house.

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    This document discusses make or buy decisions for two construction materials: binding wire and AAC concrete blocks. For binding wire, making it in-house would cost Rs. 9,39,360 compared to buying it for Rs. 10,10,000, a cost savings of Rs. 70,640 or 7%. For AAC blocks, making them in-house would cost Rs. 14,76,50,000 compared to buying them for Rs. 16,00,00,000, a cost savings of Rs. 1,23,50,000 or 7.71%. Based on the lower costs, the document recommends making both materials in-house.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    55 views6 pages

    Make or Buy Decision: Resource Management (Cem) M. T - S - Ii C E & M

    Uploaded by

    xjsddjwef
    This document discusses make or buy decisions for two construction materials: binding wire and AAC concrete blocks. For binding wire, making it in-house would cost Rs. 9,39,360 compared to buying it for Rs. 10,10,000, a cost savings of Rs. 70,640 or 7%. For AAC blocks, making them in-house would cost Rs. 14,76,50,000 compared to buying them for Rs. 16,00,00,000, a cost savings of Rs. 1,23,50,000 or 7.71%. Based on the lower costs, the document recommends making both materials in-house.

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    RESOURCE MANAGEMENT (CEM )

    M. TECH. SEM. II

    CONSTRUCTION ENGINEERING & MANAGEMENT

    MAKE OR BUY DECISION

    Submitted by
    Nisarg Suthar (18014111035)
    Maunil Mehta (180141110 )

    Guided by
    Prof. Ankit Patel Sir
    DEPARTMENT OF CIVIL ENGINEERING
    U.V. PATEL COLLEGE OF ENGINEERING
    GANPAT UNIVERSITY

    DEPARTMENT OF CIVIL ENGINEERING U. V. PATEL


    COLLEGE OF ENGINEERING, GANPAT UNIVERSITY,
    KHERVA
    March - 2019
    1. MAKE BUY DECISION OF Binding Wire:
    Total production per month :- 92 M.T

     MAKE DECISION:

    A. Fixed Capital

    SR. NO PARTICULARS QTY. COST

    1 Bending wire machine 1 NO. ₹ 3,50,000 /-


    Set of continuous Wire Drawing
    2. 4 SET ₹ 6,50,000 /-
    Machine Intake
    Hot Diping galvanizing unit consist
    of Pickling, Washing Flux Tank,
    3. L.S ₹ 4,00,000 /-
    Diesel Furnace, Zinc Bath,
    Extraction unit and Pot
    Total ₹ 13,50,000 /-

    B. WORKING CAPITAL (1 month )


    1. Staff & Labour
    Sl. Administrative No. Salary Amount

    No. Staff (In Rs.) (In Rs.)


    1. Manager 1 10,000 5,000
    2. Supervisor 2 8,000 16,000

    3. Clerk 2 6,000 12,000


    4. Accountant 1 12,000 12,000
    5. Peon/Watchman 2 3,000 6,000

    Workshop Staff
    1. Skilled Workers 8 5,000 40,000
    2. Unskilled Workers 8 2,500 20,000
    3. Helper 5 2,000 10,000
    Salary and Wages 1,26,000
    2. Raw Material

    Sl. Particulars Qty. Rate Amount

    No. (In Rs.) (In Rs.)

    Mild Steel Wire rod of 8, 9 and 100 ton 15,000 per ton 15,00,000

    10 mm Dia. Zinc Ingot 5 ton 65,000 ton 3,25,000


    Acid Fluxes and other additives L.S. - 50,000

    Total 18,75,000

    (iii) Utilities (Rs.)


    1) Power L.S. 30000
    2) Water L.S. 5000
    3) Fuel L.S. 50000

    Total 85000

    (iv) Other Contingent Expenses (Rs.)


    Rent 15000
    Postage and Stationery 4000
    Telephone 1200
    Consumable Store 25,000
    Repair and Maintenance 12,000
    Transport charges 13,000
    Advertisement and Publicity 5,000
    Insurance 10,000
    Miscellaneous Expenses 5,000
    Total 90200

    (iv) Machinery depreciation (10 %)


    = ₹ 75,000 /-
    For 1 kg Binding wire, If we manufacture at site then its cost ₹ 39.14 /- per kg
    For 24000 kg = 39.14 x 24000 = 9,39,360
     BUY DECISION:

    Sr. Description Amount


    No
    1. Unit kg cost of Binding wire ₹ 60 (including all taxes)
    2. Loading, Unloading and Transportation -
    Charges per unit
    3. Taxes if any -
    4. Any hidden charges if any -
    5. TOTAL ₹60 (including all taxes)

    Total cost of 24000 kg of Biding Wire = ₹ 60 x 20,000


    = ₹ 10,10,000/-

    Suggestion:
    Total cost saving = ₹ 10,10,000- ₹ 9,39,360= ₹ 70640/-
    Total cost saving in % = 7 %
    Hence, here we are suggesting to the owner to Make Binding Wire.

    2. MAKE BUY DECISION OF AAC CONCRETE BLOCKS:


     MAKE DECISION:

    Sr. No DESCRIPTION AMOUNT


    Financial Aspects
    1. Land -
    2. Plant, Machinery and Building in Including 5 ₹5,00,00,000
    delivery vehicles
    3. Working Capital 500 CBM/Month @ 2000/per ₹1,00,00,000
    CBM
    4. Custom Duty ₹5,00,000
    5. Freight ₹2,00,000
    6. MS tank and silos ₹20,00,000
    7. Generator ₹10,00,000
    8. Transformer ₹10,00,000
    9. Miscellaneous ₹1,00,000
    10. Working capital ₹1,00,00,000
    11. TOTAL ₹7,50,00,000/-
    12. Raw Materials
    13. Fly Ash ₹1,00,000

    14. Lime (CaO) ₹ 1,58,00,000


    15. Cement ₹ 2,50,00,000
    16. Gypsum ₹60,00,000
    17. Aluminium Powder ₹25,00,000
    18. Power & Fuel ₹30,00,000
    19. Water ₹50,000
    20. Wastages ₹1,00,000
    21. Electricity ₹30,00,000
    22. Coal ₹1,00,000
    23. TOTAL ₹5,56,50,000/-
    24. Contribution ₹8,00,000
    25 Salary & Wages ₹60,00,000
    26. Annual Maintenances ₹50,00,000
    27. Other Factory Over Head ₹2,00,000
    29. Depreciation ₹50,00,000
    TOTAL ₹1,70,00,000/-
    TOTAL = ₹ 14,76,50,000/-
    Total cost of making of 40,00,000 AAC Blocks = ₹14,76,50,000/-
    Total cost of making Fly ash per Unit = ₹ 37 / piece (600*200*200)

     BUY DECISION:

    Sr. Description Amount


    No
    1. Unit cost of AAC ₹ 38 (including all taxes)
    2. Loading, Unloading and Transportation ₹2.00
    Charges per unit
    3. Taxes if any -
    4. Any hidden charges if any -
    5. TOTAL ₹40.00 (including all taxes)

    Total cost of 40,00,000 Units of AAC = ₹ 40 x 40,00,000


    = ₹16,00,00,000/-

    Suggestion:
    Total cost saving = ₹ 16,00,00,000 - ₹ 14,76,50,000 = ₹ 1,23,50,000/-
    Total cost saving in % = 7.71%
    Hence, here we are suggesting to the owner to Make AAC Blocks.

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