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.