Heuristic Model for estimating prices of Castings & Forgings

Industry Vertical and the Company:
An Aircraft overhauling company that services 500+ defense aircraft.

The Challenge:
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.

Our Approach:
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.

The Outcome:
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

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