Innovative Components, Inc.: Lawrence - I view this issue as one of opportunity cost. If my pressing isn't running, it isn't making money. So, how you value that depends on two things - your capacity utilization and how you price your products. First, if you are running at full capacity, the loss of a machine is whatever profit it generates/hr. If you have open presses sitting and waiting, then the cost of downtime is much lower, since you can just move the job to another press. In that case, I would only charge the cost of downtime for the time wasted moving the job from one press to another.
How you value the time lost to downtime, in my view, depends on whether you include profit in the hourly shop rate you use to quote jobs. If yes, then that hourly rate is a good one to use. If your hourly shop rate includes labor, fixed OH, & variable OH only, then you may want to divide gross profit by actual press hours for the previous year (quarter, month, etc.)and add that your shop rate to get a fully loaded value/hour/press to assign to downtime. I hope that helps
Mike O'Connor
Innovative Components
Mike O
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