RAVA Fontus Engineering Inc. Updated: 5/1/14
Cost of Design Implentation
For the independent company scenario, the product would be sold as 1-mL vegetarian pear shaped capsules packaged in three different bottle sizes. The packaging will be 100% recyclable and BPA-free. It was necessary to make assumptions for the present worth calculation, such as an interest rate of 6% for 10 years, and not accounting for growth or sales. The present worth of this scenario is $680,000. Additionally, this scenario would break-even by the third year. The total cost included expenses such as manufacturing, personnel, utilities, office space, materials, and overhead. Some specific equipment needed for this scenario includes labeling machine, capsule filling machine, and stainless steel tanks. The total cost resulted to be $430,000, which are only start-up expenses. The revenue was calculated by assuming selling six million capsules per year, which was projected to be $541,000. The profit for this scenario was estimated by subtracting the total cost from the revenue, which would be $111,000. The table below summarizes the present worth, total cost, revenue, and profit values.
The cost of the chosen optimum mineral composition would be $1.96 per liter (1000 mL doses), as can be seen in the table below. These costs are accounting for obtaining the food grade minerals from environmentally sustainable companies. This cost would be the same for both scenarios.
The design could be implemented in two different scenarios. The first scenario is selling the mineral composition as an independent company, while the second scenario is selling the composition through a partnership with a current bottled water distributor.
Salts
|
Cost ($)
|
$/g
|
Composition 5
|
Calcium Chloride
|
165.00
|
0.007
|
$0.02
|
Ferrous Sulfate
|
120.00
|
0.005
|
$0.00
|
Magnesium Sulfate
|
80.00
|
0.003
|
$0.06
|
Potassium Iodide
|
60.00
|
0.083
|
$0.00
|
Potassium Sulfate
|
2688.00
|
0.108
|
$0.12
|
Sodium Bicarbonate
|
51.10
|
0.102
|
$1.49
|
Zinc Acetate
|
128.80
|
0.159
|
$0.27
|
Total
|
$1.96
|
Present Worth
|
$680,000
|
Total Cost
|
$430,000
|
Revenue
|
$541,000
|
Profit
|
$111,000
|
Present Worth
|
$1,660,000
|
Total Cost
|
$233,000
|
Revenue
|
$480,000
|
Profit
|
$247,000
|
Present Worth, Total Cost, Revenue, and Profit Values for the Partnership with Current Bottled Water Distributor Scenario.
Present Worth, Total Cost, Revenue, and Profit Values for the Partnership with Independent Company Scenario.
Cost of Salts
For the partnership with current bottled water distributor scenario, the composition would be sold directly to a bottled water company so they can add it to their current production process. The same economic assumptions from the independent company scenario were made for comparison purposes. Therefore, for the present worth calculation, the interest rate was 6% for 10 years, and growth or sales were not accounted. The present worth of this scenario came up to be $1,660,000, and the break-even point will happen after the second year. The total cost included the same expenses in the independent company scenario, such as manufacturing, personnel, utilities, office space, materials, and overhead. Some specific equipment needed for this scenario includes a liquid handling robot and shipping tanks. The total cost resulted to be $233,000. The revenue was calculated by also assuming selling the same six million 1-mL optimum mineral compositions, which was projected to be $480,000. Every 500 mL of RO bottled water needs 1 mL of the designed optimum mineral composition. The profit for this scenario was estimated to be $247,000, which makes this scenario more profitable and economically feasible. The table below summarizes the present worth, total cost, revenue, and profit values.
Photo Credit: Google
Photo Credit: Google
RAVA Fontus Engineering Inc.
