Let's assume an OEM requires 1,000 machined cylinder blocks per day. The part is sold for $300. Of these 1,000 3% do not pass leak test and require impregnation. The typical cost to have this part impregnated with a reputable service center is $8. In addition, assume the parts are manufactured during one shift Monday through Friday, totaling 240 days per year.
Casting Scrap Cost:
If the 30 castings are scrapped, then the cost is:
- 30 * $300 = $9,000.00 per day
- $9,000 per day * 240 days = $2,160,000 per year in scrap
Post Vacuum Impregnation Cost:
If the castings are sealed through vacuum impregnation, then the cost is:
- 30 pcs/day * $8.00 per block = $240 per day.
- Cost of shipping to the impregnation source = $100.
- Total cost of $340 per day * 240 days = $81,600.
Vacuum Impregnation Scrap Cost:
Assume that 5% of the 30 impregnated castings leaked after impregnation:
- 30 pcs/day to impregnation * .05 leak rate = 2 castings per day are scrapped.
- 2 scrap castings/day * $300/casting = $600 per day.
- $600 /day * 240 days = $144,000 per year in scrap after impregnation.
The actual impregnation cost is $225,600 per year. $81,600 (cost of impregnation) + $144,000 (cost of post impregnation scrap). In this example the largest single cost is not the cost of impregnation, but it is the cost of the scrap after impregnation. The true savings are realized only after leaked castings after vacuum impregnation are accounted.
This is a great investment by any measure. It is pretty easy to determine why the customer would choose to recover the castings. The customer will spend $225,600 to save $2,160,000 per year.
In the real world, there are additional finances that may include,(but are not limited to): additional machining costs, capacity loss and cash flow. It is important to perform an in-depth finance analysis before moving forward.