Heuristic Model for estimating prices of Castings & Forgings
Industry Vertical and the Company:
An Aircraft overhauling company that services 500+ defense aircraft.
Overseas suppliers typically provided bulk prices like one-aircraft-equivalent of castings and forgings that are priced in terms of USD. The aircraft manufacturer wanted individual prices for each part to be estimated to make it easier for creating a stocking policy & for billing for spares to the end-customers.
Heuristic model was created by taking the type of material used (viz. Copper, titanium, etc.), weight of the casting, and Complexity Score (a given no. to scale) as variables.
A statistical model was created by comparing the heuristic-estimated-prices of the spares with similar parts supplied by Western countries like UK, France and USA, where accurate individual prices wereavailable.
20,000+ Part.No’s in total made the analysis big and complicated.
When the formula was applied, the prices estimated were found to be close to ±8% accurate on average individually, and the bulk prices compared were ± 1% accurate