Eric Demerath

English 311

1

Semi-Automatic Leg Feasibility
Introduction
The purpose of this report is to determine that feasibility of continuing the development of the
Semi-Automatic Adjustable Ramp Leg (LE 5102).
Background
In April 2014 an initial prototype of LE 5102 was developed in attempt to expand on the options
available in the Mobile and Impactable Ramp product lines. This option is an upgrade for the
manual option (LE 5101) in which the operator must operate the hydraulics, adjust the pin in one
leg, walk around the ramp or semi-trailer (about 80 feet), adjust the pin in the other leg, then
return to the hydraulic controls and relieve the pressure. LE 5102 eliminates the need for excess
walking and wasted operation time.
Scope
Using the results of the prototype build and available market research the feasibility of
introducing the Semi-Automatic leg as new product was analyzed. From the prototype build the
cost will be compared to the estimated market value to see if the product will be profitable at a
sufficient rate to continue development
Cost of Manufacturing
The features of the Semi-Automatic Leg (LE 5102) make it more complicated than the standard
Manual Leg (LE 5101). It requires more steel and labor to make LE 5102. Below is a Cost
breakdown of the difference in cost between the two options based on various quantities.

Run Quantity LE 5101 Cost (Each) LE 5102 Cost (Each) Difference
1-10 $ 439.00 $ 889.00 $ 450.00
10-50 $ 417.00 $ 840.00 $ 423.00
50-100 $ 396.00 $ 796.00 $ 400.00
100+ $ 376.00 $ 754.00 $ 378.00
Cost of Development
In order to fully bring this product to market more extensive testing and development will be
required. Below is the estimated cost of development
Task / Product Associated cost
Engineering Labor $ 6,000.00
Mechanical Drawings $ 1,000.00
Additional Prototypes $ 3,000.00
Eric Demerath
English 311

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Testing $ 2,000.000
Total: $ 12,000.00

Market Value / Demand
The market value was estimated by contacting 20 of Leum Engineerings Sales Representatives
and asking them to estimate the amount the usual customer would pay to upgrade to the Semi-
Automatic Leg. In addition to asking our sales network 10 previous customers that received a
ramp with LE 5101 were contacted and asked if they would have upgraded to LE 5102 had the
option been available and at what cost.
Sales Rep. Est. Market Value $ 1200.00
Customer Est. Market Value $ 1000.00
Number of Customers that would upgrade 6 out of 10
Conclusion
Comparing the current quantities and profits of the Manual Leg with the projected quantities and
profits for the new Semi-Automatic Leg will show whether or not the continued development of
the new leg design is feasible.
Year Estimated
Ramp Sales
Upgrade
Rate
LE 5101
Profit
LE 5102
Profit
Difference
in Profit
Est. Yearly Profit
(LE 5102)
2015 50 0.6 $ 83.00 $ 260.00 $ 177.00 $ 5,310.00
2016 75 0.6 $ 104.00 $ 304.00 $ 200.00 $ 9000.00
2017 100 0.6 $ 104.00 $ 304.00 $ 200.00 $ 12,000.00

Based on the information gathered the development of the Semi-Automatic Leg would become
profitable in approximately 20 months. In addition to the current sales projection many of the
Sales Representatives believe that adding this product will cause the number of sales we see to
increase because of better marketability. It is likely that there will be a return on the investment
of developing the Semi-Automatic Leg in 18 months or less.
Recommendations
The development of the Semi-Automatic leg should continue. It will become profitable in 1.5
years and give Leum Engineering to make more potential sales due to the innovative design and
ease of use.