Profitability analysis of a product family
Vuorihuhta, Miika (2022)
2022
Konetekniikan DI-ohjelma - Master's Programme in Mechanical Engineering
Tekniikan ja luonnontieteiden tiedekunta - Faculty of Engineering and Natural Sciences
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Hyväksymispäivämäärä
2022-11-15
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202210318037
https://urn.fi/URN:NBN:fi:tuni-202210318037
Tiivistelmä
This master’s thesis was made for a company that manufactures products by reprocessing plastic materials such as cellular plastics, rubbers, and foams. The case company’s product and customer portfolios have grown a lot during the last decade. The case company has reached a point where it is increasingly important to analyze the profitabilities of different products, manufacturing techniques, and customers. The goal of this thesis was to calculate and analyze the profitability of a product family that the case company manufactures. In addition, the purpose of this thesis was to create an example how product profitability can be analyzed and what factors should be considered. Some of the presented information has been changed and some tables have been removed because of confidentiality reasons.
This thesis was carried out as a quantitative and qualitative case study for the case company. This thesis consists of two parts, a theory-based part and an empirical study part. Literature review, interviews and conversations, observation and quantitative data analysis were chosen as research methods for this thesis. The theoretical part that works as a base for this thesis was created by utilizing a comprehensive literature review. The theoretical part of this thesis consists of topics such as profitability, cost accounting, pricing, manufacturing processes, and quality. These topics were important in terms of achieving the goal of this thesis.
The empirical study part was started by analyzing the manufacturing process of the product family. Observations, interviews, and conversations were used to study the manufacturing process. Information and quantitative data were collected from the manufacturing process. Cost structures and prices of the analyzed products were examined by looking at the case company’s data archives. The product family’s quality costs were studied by collecting information regarding complaints and the quantity of discarded products. Collected data from the manufacturing process was used to update the product family’s cost accounting calculations. Updated cost accounting calculations were utilized to calculate the quality costs for the analyzed products. The profitabilities of the analyzed products were calculated by comparing the updated cost accounting calculations to product prices. The profitabilites were negative.
Development proposals were created based on the results of the empirical study and the gathered information in the theoretical part. It is possible to make the product family profitable with the created development proposals. The development proposals were divided into three categories: proposals for cost accounting and pricing, proposals that concerned the manufacturing process, and general development proposals for the case company. The case company has realized the importance of the presented development proposals and some of them have been worked on already.
This thesis was carried out as a quantitative and qualitative case study for the case company. This thesis consists of two parts, a theory-based part and an empirical study part. Literature review, interviews and conversations, observation and quantitative data analysis were chosen as research methods for this thesis. The theoretical part that works as a base for this thesis was created by utilizing a comprehensive literature review. The theoretical part of this thesis consists of topics such as profitability, cost accounting, pricing, manufacturing processes, and quality. These topics were important in terms of achieving the goal of this thesis.
The empirical study part was started by analyzing the manufacturing process of the product family. Observations, interviews, and conversations were used to study the manufacturing process. Information and quantitative data were collected from the manufacturing process. Cost structures and prices of the analyzed products were examined by looking at the case company’s data archives. The product family’s quality costs were studied by collecting information regarding complaints and the quantity of discarded products. Collected data from the manufacturing process was used to update the product family’s cost accounting calculations. Updated cost accounting calculations were utilized to calculate the quality costs for the analyzed products. The profitabilities of the analyzed products were calculated by comparing the updated cost accounting calculations to product prices. The profitabilites were negative.
Development proposals were created based on the results of the empirical study and the gathered information in the theoretical part. It is possible to make the product family profitable with the created development proposals. The development proposals were divided into three categories: proposals for cost accounting and pricing, proposals that concerned the manufacturing process, and general development proposals for the case company. The case company has realized the importance of the presented development proposals and some of them have been worked on already.