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Process-Based Cost Model for a Print and Copy Firm

A process-based cost model is used to inform technical decisions. This cost model, for a print copy firm, shows how the unit cost and cost distribution vary as a function of materials, labor, equipment cost, reject rate, and production volume. A cost model can be used to identify cost drivers and to address the implications of change in a process or product. Vary the different inputs to see the different relevant costs and their effect on unit cost. The spikes in the cost model represent production volumes beyond which another printing press has to be bought.
  • Contributed by: Sam Shames
  • Based on material from: Strategic Materials Choice: Economic and Environmental Issues in Materials Selection, MIT, Fall 2012, taught by Joel Clark and Randolph Kirchain

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DETAILS

This model is based on the Xerox iGen 150 printing press, with a list price of $720,000. It can print 8,250 sheets of 8.5×11 paper per hour and is available for production 80% of the time. The toner cost for this unit is $2,684 for a set of CMYK toner capable of printing 90,000 sheets. The paper cost is $83.70 for 1,250 sheets. This model uses a 240-day-per-year work schedule, with one 8-hour shift per day and a 1-hour break on that shift.
For more details on the Xerox baseline costs, see the following links:
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