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How to Calculate the Litho-lamination Cost Accurately ?

Dec 23, 2018

How to Calculate the Litho-lamination Cost Accurately ?


This section shows cost breakdown for producing a standard-size box for different quantities using the litho-lamination process. Similar to flexo post-sheet, costs are indicated as priceper unit which includes profit and the cost of manufacturing one box. The cost was alculated for 1, 10, 50, 100, 500,1500, 20,000 and 100,000 rint orders. Table 1 shows the esultswith all the direct and indirect cost and profit included.


Table 1 Litho-lamination cost estimation for different print quantities

 

The cost estimation format is quite similarto the flexo post-sheet cost estimation. Total cost is the sum of direct cost and indirect cost. In the direct cost, instead of ink and printing plates, printed linerboard is included. Litho-lamination uses a lithographically printed linerboard pasted to a single face corrugated blank. Therefore the linerboard cost estimate includes cost of the lithographically printed linerboard. It is assumed that the linerboard is printed independent of the facility that combines the corrugated board. It is added as a separate cost in the software. Like wise the “paper board” is the estimated cost of single-face corrugated sheet.


Production and labor costs are almost similar to flexo post-sheet as calculated by the Amtech software. The difference is that set-up cost doubles at higher runs of 100,000 for litho lamination. The reason for doubling the set-up cost includes operator shift change and/or machine cleaning. 


The machines assumed for production were an Automatan laminating machine, a one-cut auto-platendie-cutting machine, and a unitized banding machine. The costs of these machines were already loaded in the software library. Overhead costs are lower than the flexo post-sheet as printing is done independent of the lamination facility. 


Similar to set-up cost, overhead costs are assumed to double at 100,000 prints. With a big print order, more overhead is associated. Table 2 and figure 1 below show the magnitude of direct, indirect and total cost per unit for different batch sizes for the litho-lamination process.


Table 2 Price/unit cost for direct, indirect andtotal cost for different print quantities for flexo post-sheet


 figure 1


Like flexo post-print, the direct cost is abig part of total cost. Fixed direct costs are prominent up to 500-1,500 units, and for higher quantities variable direct cost becomes more prominent. Direct cost is a big part of total cost and independent corrugated companies have no control over the prices of direct costs for example paperboard. 


Independent corrugated companies only control indirect costs. Hence, independent corrugators strive to run manufacturing plants very effectively and efficiently to reduce total indirect cost and offer low prices to the customer.

 

Figure 2 Closer view of the price/unit cost for direct, indirect and total cost for 500 units or higher for litho-lamination

 

The price to a customer was calculated the same way as flexo post-sheet. Figure 2 shows a closer view of the costs. A standard 10% profit margin is added to the cost up to 1500 prints, and the profit margin is reduced to6% for bulk orders of 20,000 or higher. Price per unit is calculated by dividing the “price to customer’ by number of units produced.


The unprinted paperboard price assumptionswere same as flexo post-sheet and were 10% and 15% for bulk orders of 20,000 and 100,000 quantities respectively. A 10% labor discount is applied and as mentioned earlier, the set-upand overhead cost is assumed to double for 100,000 quantity increments.


The cost per unit decreases with the increase in the number of print orders. The cost of printed linerboard remains constant up to 250-300 sheets because small run jobs are not prevalent in the lithographic printing industry. At 1,500 units, the estimated cost per unit is $4.79 compared to flexo post-sheet where the estimated cost per unit was $2.45. Although the price is higher, litho-lamination offers great printing quality. 


The results also show that litho-lamination is most cost efficient at print quantities of 20,000 prints or higher. However, results indicate that flexo post-print is a substantially less expensive option for the same volume if quality is not a  concern. Another process that offers a high print quality is litho-labeling, which is discussed in the next section.