What is Mixing ratios and why are they required to be maintained before creation of cost estimate?

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What is Mixing ratios and why are they required to be maintained before creation of cost estimate?

Post  michael_fico on Fri Mar 23, 2012 6:46 pm


Mixing ratios are weighting factors assigned to the procurement
alternatives. This weighting factor is obtained from the planning
department based on the usage of the procurement alternatives during
the planning year.

For e.g.
Procurement alternative 1 (production version 1) 40% will be
manufactured

Procurement alternative 2 (production version 2) 35% will be manufactured

Procurement alternative 3 (production version 3) 25% will be manufactured

This % will be maintained as mixing ratios.
Thus when system calculates the mixed cost estimate, system will first
cost each of the production version and then multiply each of the costs
with the weighting factors.

Thus

240 (cost of prod. Vers 1) X 40 = 9600
210 (cost of prod. Vers 2) X 35 = 7350
160 (cost of prod vers 3) X 25 = 4000
Mixed costs 17350/100 = 173.5

michael_fico

Posts : 163
Join date : 2012-03-23

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