search  current discussion  categories  business - pricing 

pricing (my turn page 5)long

updated fri 31 jan 97 on sat 25 jan 97

For those of you who have been following this thread since I started to put
down my thoughts, I thank you for your patience. For those of you who just
joined in, welcome. I hope you find what we are talking about interesting
and informative. If you just joined in you may have missed pages one through
four. If you cannot find them and wish to read them just send me an e-mail
and I will send you a copy.

We have determined the FIXED COSTS of our costing model to be $38,350.00. We
have also started to discuss VARIABLE COSTS in page four. In doing so we
established our cost of clay used to make a mug to be approximately $0.40.
Finding this information was fairly simple. The other information may prove
more elusive.

In order to gather the other information it may be a good idea to make up a
few data collection charts. These charts do not have to be complicated but
they should be prepared so that we can read and record data easily. In
otherwords, don't make a form with a thousand little squares. design the
data forms using large print and large writing areas.

The data forms don't have to be fully completed with data the first time
through a production session or series. They should however, be updated or
filled in as often as possible. Sometimes we may forget to record a specific
action. Don't worry. Clay is a repetitive task and actions repeat
themselves many times over. What we miss today, we will be able to record
tomorrow. This does not mean, however, that we can be lax at recording
information. We must always record information because as ceramists, we are
obliged to carry out actions that are not continuous. There are stages in
our production when we must wait until the clay has reached a certain state
before we can continue. It is also important that we acquire a good clock
and we place it in view. If we do not have a good idea of time we will not
be able to record accurate data.

One of the first data forms we should consider making is one to help us find
our PRODUCTION CAPABILITY. We will use this form, to determine the maximum
number of mugs that we could produce in one year. We will do so by sampling,
our production capability over a short periods or sessions, and expanding
the results to give an approximate yearly figure. We may be analyzing more
that one product line at a time, therefore, our form should include a header
to identify the item under production. in the specific session. We will
require a table of four columns and approximately 12 rows. We will Include a
space at the bottom of our chart for additional comments and to give us a
place to register other data that may help. The four column headers should
The task list is found in the ACTION column. The task list should show
activity such as: wedging , throwing, trimming, wet decorating, appendage
forming, appendage attaching, bisque decorating , glazing, kiln loading, and
of course work evaluating. There may be more steps than mentioned here, but
be careful not to include concurrent or parallel activity. Examples of
these activities are; bisque firing and gloss firing. These activities
can be carried out simultaneously while throwing, or decorating . The set up
time and cleaning time will be calculated in the daily routine.

Let us say we arrive at our studio at 07:30 am and start immediately to work.
We set about arranging our wheel and bats. We get clay from our storage
area and gather our tools, warm water buckets, our towel and what ever else
we need in order to begin to throw. Even though we do not enter the time
spent setting up on our PRODUCTION CAPABILITY chart , we should maintain
this data daily as it will be used in our analyses later. We are open our
production page and enter MUGS as the production line. The next task we
begin may be, wedging clay. We will be the one deciding our production
targets. Let us say, we choose to make 20 mugs in this production period.
We wedge and prepare our clay. When finished , we check the time we spent
carrying out the task and enter the appropriate information in the ACTION
TIME column beside the task . Lets say we took 20 minutes to wedge 25 balls
of clay. (We wedge more balls of clay than production targets as there will
surely be some cylinders that fail to achieve our quality standards). Twenty
is what we would enter in this column, In the PRODUCTION COUNT column
beside wedging clay , we would enter 25. Finally in the UNIT TIME column
we would calculate and enter the average time it takes to make one item; in
this case one ball of wedged clay. The calculation is as follows: 20/25 = .8

We will assume that we have taken 60 minutes to throw 14 clay balls that have
resulted in 12 successful cylinders. Someone Phones, and we stop what we
are doing. We check our time and enter the appropriate data on the form .
Beside the task , throwing, in the ACTION TIME column, we enter 60, and
in the PRODUCTION COUNT column, we enter 12 and in the UNIT TIME column we
would use the following calculation: 60/12 = 5 minutes. When we are
finished our telephone call we then complete our throwing session using the
remaining 11 balls of clay in a record time of 50 minutes. Beside the
throwing task, we would write 50 in the ACTION TIME column and 11 would be
entered in the PRODUCTION COUNT column. The UNIT TIME result would be:
50/11 = 4.5 minutes

We would continue to assess the ACTION TIME , PRODUCTION COUNT and UNIT
TIME calculations for each task. Once we go through a complete cycle of
making the mugs we will total the UNIT TIME column and divide this figure by
the number of mugs that are salable. After we do two or three sessions of
data collection we will begin to figure out and average hourly production
capability for all of the tasks.

Let us, for the sake of time and space, say that our production capability
of finished, ready to sell mugs , averages out to five per hour. I know
there are potters out there who can turn out 50 mugs per hour but we will not
pretend to be a supper potter. In my next posting I will use the 5 mugs
per hour to estimate our yearly production capability.

I realize that this procedure seems long an complicated but it is not. It
just requires that we record and maintain our data records accurately. It
would be more clear if I could show you a chart but I have found that
graphics do not go easily over the net. I hope I gave you something to think

Well I will close again until next page. Feed back appreciated

Terrance F. Lazaroff
St Hubert, Quebec, Canada !!!!