Practical Matters III: Commercial and Legal Implications, Project Management, and Risk Mitigation

Abstract

This chapter introduces you to some more of the “other aspects” of design. While not necessarily technical aspects, they are essential for good design, and knowing about them will help you be a better designer. More importantly, it will help you and your coworkers produce a design that is successful. This information will also help you decide whether you eventually want to go into engineering management and therefore help you make some long-term career decisions.

Homework

• 1. Consider safety certification for a product to be sold in the USA and in Europe.

  • (a) Which US agency requires safety certification for products to be used in offices?

  • (b) What type of laboratory is required for safety certification in the USA?

  • (c) Name a US and international standard that govern safety certification.

  • (d) What marking is needed on components that are to be used in safe products?

  • (e) What mark is needed for European markets?

  • (f) For European markets, what testing is needed in addition to safety certification?

• 2. Define the following terms:

  • (a) Bill of materials cost

  • (b) Conversion cost

  • (c) Non-recurring expenditure

  • (d) Recurring expenditure

  • (e) Cost of goods sold

  • (f) Tooling

  • (g) Amortization

  • (h) Depreciation

  • (i) Cost

  • (j) Price

  • (k) Gross profit

  • (l) Gross margin

  • (m) Net profit

• 3. A product is being designed. The bill of materials cost is $25, and the conversion costs per product are $8. Royalties are $3 per unit, and there is a separate one-time patent-licensing cost of $40,000. The product requires $50,000 of tooling. Assume non-recurring expenditures are amortized over 10,000 units.

  • (a) What is the cost to manufacture one item? Consider per-unit cost both for the first 10,000 units and all units after that.

  • (b) How much should the company charge if the gross margin target is 40 %? Consider both the first 10,000 units and units after that.

  • (c) How many units need to be sold to cover the non-recurring expenses?

• 4. Consider the Gantt chart shown in Fig. 15.1. On a project you are managing, there are the following times:

  • Select components: 1 week

  • Order (and receive) parts: 5 weeks

  • Draw schematic: 2 weeks

  • Layout board: 1 week

  • Order (and fabricate and receive) boards: 1 week

  • Order (and receive) fixtures: 1 week

  • Assemble and test units: 1 week

    • (a) Construct a Gantt chart of the schedule.

    • (b) On your Gantt chart, highlight the critical path in red.

    • (c) How many weeks will the project take?

    • (d) What will happen if the following changes occur:

      • (i) Ordering parts delayed 1 week

      • (ii) Circuit boards delayed 1 week

• 5. What are the three primary risks to a technical product?