KEVOS® MAKEOS · Money
Process Selection Break-Even Quantity
Above what quantity does the process with higher set-up cost become cheaper?
Break-even quantity between two manufacturing methods with different set-up (or tooling) and unit costs, the cost of each at a planned quantity, and the cheaper choice.
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How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Process A | ||
| Set-up and tooling cost | AUD | Fixed cost of method A for the batch (set-up, programming, simple tooling). |
| Cost per unit | AUD | Variable cost per unit by method A (machine time, labour, material differences). |
| Process B | ||
| Set-up and tooling cost | AUD | Fixed cost of method B (often higher for dedicated tooling or programming). |
| Cost per unit | AUD | Variable cost per unit by method B. |
| Order | ||
| Planned quantity | units | Quantity to be made (including expected repeat orders if tooling is kept). |
Method and formulas
- Total cost = set-up + unit cost × quantity.
- Break-even quantity = (set-up B − set-up A) ÷ (unit cost A − unit cost B).
- Below break-even the lower set-up cost wins; above it the lower unit cost wins.
- Example: the default methods break even at 275 units; at 200 units process A is cheaper.
Limitations
- Linear costs; learning, capacity limits and quality differences are not included.
- Unit costs must be on the same basis (direct cost or full cost) for both methods.
- Example values are illustrations. Replace them with values for your actual task.
Typical uses
- Choose between manual and CNC, or laser and punch, for a batch
- Decide when dedicated tooling pays
- Explain quantity effects on quotes
Who it is for
- Manufacturing engineers
- Estimators
- Production managers
What you get
- Break-even quantity
- Total and unit cost of each at the planned quantity
- Cheaper process
Interpreting the result
- Near the break-even quantity, choose on lead time, capacity or quality instead of cost.
References
- Machinery’s Handbook, 29th edition (Industrial Press, 2012), printed pp. 143–146. Topic reference; no source tables or recommended settings are reproduced.
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