Mr. Buddy is thinking of starting a pseudo manufacturing business.  He plans to make cheap Tuxedos for sale to party goers.  He doesn’t know anything about sewing clothes or fabric, but he has the idea and some money to invest and wants to consider the clothing business.  He believes that his market is about 800 to 1,000 suits per year, of sizes varying from small to very large.  He wants to hire a team of seamstresses to make the tuxedos for him.  The seamstresses will cost him about $ 18/hour each plus benefits and payroll taxes to the tune of 32%.
 
He hires your team to help him make the business case for his business plan.  He wants to request a loan from a bank to get his business started.  The bank will charge him 8% per year and want him to start paying back after two years and be paid up in four more years.
 
To help Mr. Buddy you need to estimate his costs (materials, building, utilities, et.) and his revenue. You need to document your assumptions and the basis for them (I suggest to make some phone calls and some research. Please, do not make up numbers), and show your case using graphs (revenues and costs over time, ~ 6 years).

Quote:

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Originally Posted by mcarol44

Mr. Buddy is thinking of starting a pseudo manufacturing business. He plans to make cheap Tuxedos for sale to party goers. He doesn’t know anything about sewing clothes or fabric, but he has the idea and some money to invest and wants to consider the clothing business. He believes that his market is about 800 to 1,000 suits per year, of sizes varying from small to very large. He wants to hire a team of seamstresses to make the tuxedos for him. The seamstresses will cost him about $ 18/hour each plus benefits and payroll taxes to the tune of 32%.

He hires your team to help him make the business case for his business plan. He wants to request a loan from a bank to get his business started. The bank will charge him 8% per year and want him to start paying back after two years and be paid up in four more years.

To help Mr. Buddy you need to estimate his costs (materials, building, utilities, et.) and his revenue. You need to document your assumptions and the basis for them (I suggest to make some phone calls and some research. Please, do not make up numbers), and show your case using graphs (revenues and costs over time, ~ 6 years).

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First, you do this, like you're supposed to.

5 x 40 = 200
200 x 52 weeks = 10,400
12 months * 83 tuxedo's = 996 tuxedo's
10,400 hours / 996 tuxed's = 10.40 hours per tuxedo
( ( ( 1000 * ( 10.40) ) * 18 ) * 1.32 ) * 6 = 1,482,624 for 6 years
1482624 / 6 = 247,104.00 per year
248054.4 / 5 seamstress's = 49,420.80 per seamstress including taxes.
To check the work
40 * 18 * 1.32 * 52 = 49,420.80
49420.80 * 5 = 247,104.00
247104.00 * 6 = 1,482,624


( ( 56 ) * 1000 ) * 6
336000 / 6
Most tuxedo's are made of Worsted Wool suiting fabric. Wholesale it would cost us between $7-$9 per yard. Retail it costs $9-$11 per yard. From looking around I've learned that it would take 8-10 yards to make one suit. For a small suit 8 yards, medium suit 9 yards, large suit 10 yards, extra large about 11 yards. So here is what I have…..



Max 1,000 suits per year. To keep things simple, I broke things up into an even amount of sizes…..

Totals: $66,500 to manufacture 1,000 tuxedo's w/worsted wool at $7 per yard for the year.



Some research - Over 12 months we'd average 83 tuxedo's (with the height of the tuxedo season being spring for proms and summer for weddings). From what I've been researching the process of putting together a tuxedo can be very involved. I think we'd need at least 5 seamstresses. That would cost 5x18x40 = $3,600 weekly plus 32% for benefits and payroll. Let me do say also that I did find that if Mr. Buddy purchased a Gerber cutter he could reduce his labor cost dramatically. Check out this info.



The Gerber cutter is said to be able to cut all the pieces of a man's three-piece suit in 3 minutes versus 30 minutes by hand. Sensors detect flaws in the fabric, which are held in place using vacuums as the fabric is automatically fed to the cutting machines. Guided by an electronic file, a machine automatically labels the pattern with bar-code tags to identify the various pieces during the cutting process. The work of five to six people is cut down to one. Automated cutters can cut up to 10 yards a minute.



I've requested a quote for a price on one of these machines. I found this info on the following website Forbes.com - Magazine Article.



Cost of building. Check out this website LoopNet - #1 in Commercial Real Estate Online. As a realtor I know that there is an oversupply of available space for rent. Most space goes for about $8 and above per sq ft depending on where it is. I think Mr. Buddy needs about 3500 sq feet of industrial space and I would negotiate $1200 per month flat including utilities ($1200 x 12 months = $14,400 per year).

5 x 40 = 200
200 x 52 weeks = 10,400
12 months * 83 tuxedo's = 996 tuxedo's
10,400 hours / 996 tuxed's = 10.40 hours per tuxedo
( ( ( 1000 * ( 10.40) ) * 18 ) * 1.32 ) * 6 = 1,482,624 for 6 years
1482624 / 6 = 247,104.00 per year
248054.4 / 5 seamstress's = 49,420.80 per seamstress including taxes.
To check the work
40 * 18 * 1.32 * 52 = 49,420.80
49420.80 * 5 = 247,104.00
247104.00 * 6 = 1,482,624


( ( 56 ) * 1000 ) * 6
336000 / 6
Most tuxedo’s are made of Worsted Wool suiting fabric. Wholesale it would cost us between $7-$9 per yard. Retail it costs $9-$11 per yard. From looking around I've learned that it would take 8-10 yards to make one suit. For a small suit 8 yards, medium suit 9 yards, large suit 10 yards, extra large about 11 yards. So here is what I have…..



Max 1,000 suits per year. To keep things simple, I broke things up into an even amount of sizes…..

Totals: $66,500 to manufacture 1,000 tuxedo’s w/worsted wool at $7 per yard for the year.



Some research - Over 12 months we’d average 83 tuxedo’s (with the height of the tuxedo season being spring for proms and summer for weddings). From what I’ve been researching the process of putting together a tuxedo can be very involved. I think we’d need at least 5 seamstresses. That would cost 5x18x40 = $3,600 weekly plus 32% for benefits and payroll. Let me do say also that I did find that if Mr. Buddy purchased a Gerber cutter he could reduce his labor cost dramatically. Check out this info.



The Gerber cutter is said to be able to cut all the pieces of a man's three-piece suit in 3 minutes versus 30 minutes by hand. Sensors detect flaws in the fabric, which are held in place using vacuums as the fabric is automatically fed to the cutting machines. Guided by an electronic file, a machine automatically labels the pattern with bar-code tags to identify the various pieces during the cutting process. The work of five to six people is cut down to one. Automated cutters can cut up to 10 yards a minute.



I’ve requested a quote for a price on one of these machines. I found this info on the following website Forbes.com - Magazine Article.



Cost of building. Check out this website LoopNet - #1 in Commercial Real Estate Online. As a realtor I know that there is an oversupply of available space for rent. Most space goes for about $8 and above per sq ft depending on where it is. I think Mr. Buddy needs about 3500 sq feet of industrial space and I would negotiate $1200 per month flat including utilities ($1200 x 12 months = $14,400 per year).