MARKET FORECAST
We predict dramatic increases in demand for Om Headphones, after locking down partnerships with Best Buy and Amazon, upwards of 15K units/month over the next 18 months. Shortly thereafter, after initiating cross-licensing deals, it is rumored that demand will increase again upwards of 50K units/month, and FitX will become something of an OEM. This data is based off of marketing research.
INVENTORY
Our sales and marketing team estimated the above demand rates. After finding the cost to manufacture each part, we were able to determine the cost of one month in inventory. Given the size of the product, we were able to estimate the number of pallets, and the required floor space. This was important to determine the facility we needed.
FACILITES
All of our manufacturing will be based in Shantou, Guangdong Province, China because this special economic zone offers the lowest labor rates and most relevant technical expertise and capabilities to make personal audio products. We will then store our product in a warehouse in Fresno. Fresno is ideal for our needs because being located in the central valley gives us easy access to our key distribution channels for individual sales. The cost per square foot in fresno is very cheap, only $7.00! We will be based in a 6,500 square foot warehouse. This satisfied our modest storage needs, with room to expand should we have to hold inventory at any point. Inventory cost will be kept in check by the having more frequent shipments out to our distributors. If demand does rise to a level where 6,500 sq ft is insufficient, we will expand to a second or larger building in Fresno.
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LABOR
The Right Headphone has the most complex assembly, followed by the Left Headphone and Electronics Assembly. While calculating the capital required to launch the OM Headphones, we found it useful to enumerate cycle times in our Shantou factory. We estimate that it assembly will take 7 minutes and 27 seconds, with a total of seven workers on the assembly line.
Our labor cost per unit is as follows: ($2.04 per hour *7 workers)*(60 min/cycle time) = $1.785 of labor per unit
For more details please check out:
Our labor cost per unit is as follows: ($2.04 per hour *7 workers)*(60 min/cycle time) = $1.785 of labor per unit
For more details please check out: