Through market research and competitor analysis Nebraska Toaster Company has found a market for toaster oven new product that is not currently being produced by competitors. This new toaster can toast bagels or regular toast bread or grill sausages. It will be targeted for a consumer group of young family households. The customer requirements and important features to the consumer have been identified and the Nebraska Toaster Company will focus on these for the toaster oven design. The criteria are: Toasts properly Size Speed of toasting Toaster capacity Appearance Easy to clean Nebraska Toaster Company wants to competitively match the price toaster oven to basic toasters; the competitive market price is $20.00. Nebraska Toaster Company wants to earn a profit of 20% of sales price. Relevant cost information for the company follows in Table 1. Most of the life cycle activities are done inside the firm, but shipping is outsourced Table 1 Life Cycle and Value Chain Analysis Value Chain Inside Life Cycle R&D Target $ 4.00 Current $4.20 Gap $ 0.20 Target Outside Current Total Gap Target $ 4.00 Current $ 4.20 Gap $ 0.20 (25%) Manufacturing 9.00 12.00 3.00 (25%) 9.00 12.00 3.00 (56%) (56%) Selling 1.60 1.80 0.20 1.60 1.80 0.20 (10%) (10%) Shipping $ 0.90 $ 1.00 $ 0.10 0.90 1.00 0.10 (6%) (6%) General Administration 0.50 0.70 0.20 0.50 0.70 0.20 (3%) (3%) Total $ 15.10 $ 18.70 $3.60 (94%) $ 0.90 (6%) $ 1.00 $ 0.10 $ 16.00 $ 19.70 $ 3.70 The toaster company through value engineering and continuous improvement plans to determine a way to reach the target cost by looking at the products life cycle and its value chain activities to determine where to reduce costs. Step 1 -Product Functional Cost Analysis Nebraska Toaster Company plans to implement functional analysis to target areas of cost reduction. Here the company breakdowns the current $12.00 manufacturing costs (from Table 1 "Manufacturing" row and "Total Current" column) for the toaster oven by the components' estimated costs and functions performed. The result is in Table 2 Table 2 Product Functional Cost Analysis Component Heating unit Display light Lever Function Toast bagels or grill sausages Current Cost $2.40 % of Cost 20% Indicates the process of toasting or grilling Lowers bagels or sausages into toaster & initiates toasting or grilling 1.60 13 0.60 5 Spring coil Temperature control timer Pops up bagels or sausages when toasted or grilled Controls degree of toasting or grilling 0.60 5 8.60 5 Body design Holds bagels or sausages 5.10 43 Crumb and grease catcher Catches crumbs and greases & is removable for cleaning 1.10 Total $12.00 100% The Nebraska Toaster Company plans to rank the features of the new bagel toaster according to customer preferences and requirements, in Step 2. Step 2-Customer Requirement Analysis Nebraska Toaster Company selected a customer focus group to rank the six most important characteristics or requirements as shown in Table 3. Table 3 Customer Requirement Analysis Customer Requirements Toasts and grills properly Size Speed of toasting or grilling Toaster oven capacity Appearance Customer Ranking Ranking is from 1 to 5, 5 the most important Relative Ranking Rave Score % 5 5 28 3 3 17 3 3 17 2 2 11 5 Nebraska Toaster Company selected a customer focus group to rank the six most important characteristics or requirements as shown in Table 3. Table 3 Customer Requirement Analysis Customer Requirements Toasts and grills properly Size Speed of toasting or grilling Toaster oven capacity Appearance Easy to clean Total Customer Ranking Ranking is from 1 to 5, 5 the most important 5 Relative Ranking Raw Score % 5 28 3 3 17 3 3 17 2 2 11 1 1 4 4 22 18 100 The customers rank the criteria- toast or grill properly, cleaning, and size-as the most important relative to the other customer characteristics or requirements. The next process compares the customer requirement features to the component functions. Step 3- Quality Function Development Analysis Nebraska Toaster Company engineers assessed the new toaster oven product's functional performance as shown in Table 4. Table 4 Quality Functional Performance Assessment Components or Functions Heating Display Customer Requirements Toasts properly 50% Unit Light Lever 20% Spring Coll 20% Temperature Body Crumb Control & Timer Design Catcher Total 10% 100% Size Speed of toasting Toaster capacity Appearance sex 50% 100% 70% 10% 20% 100% 30% 60% 5% 100% 20% 80x 100% Easy to clean 50% 45% 5% 100% Required: 1 Calculate the tarnat enet for the tractor Required: 1. Calculate the target cost for the toaster. Target cost