How a Manufacturing & Wholesale Business Can Use SmartPredictAI
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1. Manufacturing & Wholesale š
Use Case:
Manufacturers and wholesalers need to determine bulk pricing strategies while ensuring a consistent profit margin across different order sizes.
Example:
A furniture manufacturer, "Crafted Elegance," produces wooden tables and aims to calculate the optimal selling price per unit based on material, labor, and transportation costs.
Cost Breakdown for 2025:
- Raw Material Costs:
- Wood: Due to stable market conditions, the cost of high-quality hardwood is approximately $600 per cubic meter. Each table requires 0.1 cubic meters, totaling $60 per table.
- Labor Costs:
- Skilled Labor: The average wage for skilled craftsmen is $25 per hour. Each table takes 3 hours to produce, resulting in $75 per table.
- Transportation Costs:
- Shipping: With fuel prices stabilizing, the average shipping cost per table is $20.
- Overhead Costs:
- Utilities, Maintenance, and Rent: Allocated at $30 per table.
Total Cost per Table:
$60 (Materials) + $75 (Labor) + $20 (Transportation) + $30 (Overhead) = $185
Desired Profit Margin:
To remain competitive and profitable, the company targets a 40% profit margin.
Selling Price Calculation:
Selling Price = Total Cost per Table Ć (1 + Desired Profit Margin)
Selling Price = $185 Ć (1 + 0.40) = $185 Ć 1.40 = $259
Outcome:
By pricing each wooden table at $259, "Crafted Elegance" ensures a 40% profit margin, covering all costs and achieving profitability.
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