Introduction
In the should cost model it is possible to customize the model and change the model parameters to match exactly the supply chain requirements.
Available parameters and their meaning:
Purchased: Yes/no parameters defining if the material is purchased or self-manufactured.
Size: Defines the size of the organization producing the material
Country: The country where the production takes place.
Sector: Defines the industry sector of the manufacturing company
Automation: Typically set to 0.7, defines the share between manufacturing cost and material cost. Most relevant parameter in the model definition.
Tasks:
Customize the “Ball pen” model in accordance to the scenario settings shown in the screenshot below and save.
The should cost result results is now changing. In this example it is reduced to 5.36$ from before 6.69$.
Different parameters have different impact on the model. Try to vary only one parameter at a time and get familiar with the model customization.