🎓 Lesson 17
D5
Cost-Per-Part Modeling with Tooling, Labor & Overhead
Cost-per-part modeling is a way to figure out exactly how much it costs to make one finished part by adding up the costs of tools, worker time, and factory overhead.
🎯 Learning Objectives
- ✓ Calculate cost-per-part for a given milling operation using tool life, labor rate, and overhead absorption rate
- ✓ Design an optimal cutting parameter set that minimizes cost-per-part while satisfying surface finish and tool life constraints
- ✓ Analyze the sensitivity of cost-per-part to changes in tool change time and overhead rate
- ✓ Explain how tool wear progression affects amortized tooling cost per part
- ✓ Apply the Taylor tool life equation to derive cost-optimal cutting speed
📖 Why This Matters
In mining and blasting engineering, every drill hole, blast round, or milled component carries hidden cost drivers—not just explosives or electricity, but also the wear on drill bits, operator time, and shop overhead. Misjudging these can inflate unit costs by 30–50% without improving safety or fragmentation. Cost-per-part modeling turns qualitative decisions into quantifiable trade-offs—enabling engineers to justify higher-grade tooling if it extends tool life enough to cut total cost, or to rebalance labor vs. automation investments.
📘 Core Principles
Cost-per-part rests on three pillars: (1) Tooling cost allocation—spreading the purchase, regrinding, and replacement cost of cutting tools over their expected number of parts; (2) Labor cost modeling—converting cycle time (including setup, machining, and tool change) into wage-based cost using standard labor rates; and (3) Overhead absorption—assigning facility-level costs (power, maintenance, supervision, depreciation) proportionally via a rate (e.g., $/machine-hour). Crucially, all three components are interdependent: increasing cutting speed may reduce labor time but accelerate tool wear—raising tooling cost per part. Multi-objective optimization seeks the Pareto frontier where no single objective (cost, time, tool life) can improve without degrading another.
📐 Total Cost-Per-Part Model
The total cost-per-part (CPP) combines tooling, labor, and overhead contributions. Tooling cost depends on tool cost, tool life (in parts), and regrind frequency. Labor cost uses cycle time and labor rate. Overhead uses machine time and absorption rate. All terms scale with production volume and are sensitive to parameter selection.
Total Cost-Per-Part (CPP)
CPP = CPP_tool + CPP_labor + CPP_overheadTotal cost incurred to produce one unit, incorporating amortized tooling, labor, and absorbed overhead.
Variables:
| Symbol | Name | Unit | Description |
|---|---|---|---|
| CPP_tool | Amortized tooling cost per part | $/part | Total tool cost (purchase + regrinds + disposal) divided by total parts produced per tool life. |
| CPP_labor | Labor cost per part | $/part | Labor rate ($/hr) multiplied by total labor time per part (hr/part). |
| CPP_overhead | Overhead cost per part | $/part | Overhead absorption rate ($/machine-hr) multiplied by machine time per part (hr/part). |
Typical Ranges:
Surface drill (DTH) in hard rock: $7.50 – $14.20/part
CNC-machined blast initiator housing: $18.50 – $42.00/part
💡 Worked Example
Problem: A rock drilling rig drills blast holes using tungsten-carbide-tipped bits ($420/bit). Each bit lasts 80 holes before regrinding ($95/regrind), and can be regrinded 3 times before discard. Cycle time per hole = 4.2 min (includes positioning, drilling, and bit change). Labor rate = $48/hr. Overhead absorption rate = $62/machine-hour. Calculate CPP.
1.
Step 1: Compute total usable tool life = 80 holes × (1 initial + 3 regrinds) = 320 holes.
2.
Step 2: Total tooling cost = $420 (new) + 3 × $95 (regrinds) = $705 → CPP_tooling = $705 / 320 = $2.203/hole.
3.
Step 3: Labor cost = (4.2 min / 60) × $48/hr = $3.36/hole.
4.
Step 4: Overhead = (4.2 min / 60) × $62/hr = $4.34/hole.
5.
Step 5: CPP_total = $2.203 + $3.36 + $4.34 = $9.90/hole.
Answer:
The cost-per-part is $9.90/hole, which falls within the typical range of $7.50–$14.20/hole for hard-rock percussion drilling in open-pit mines.
🏗️ Real-World Application
At Newmont’s Boddington Mine (Western Australia), engineers optimized DTH (down-the-hole) hammer bit selection for 165 mm blast holes in granodiorite (UCS ≈ 220 MPa). By modeling CPP across five bit grades (WC-6%, WC-12%, WC-18%), they discovered that the mid-tier bit (WC-12%) minimized CPP at $10.32/hole—despite 18% higher upfront cost—because its extended life (112 holes vs. 80 for WC-6%) reduced tool change frequency and associated non-productive time. This shifted procurement policy and saved AUD $2.1M/year in drilling operations—validated via 3-month field trial tracked in MineRP ERP system.