LOGO

Dr. Badari Narayana T K (10)Mr. Mohan Murari (19)Mr. Sushanta Ganguly (33)Mr. Ajay Gupta (37)Ajit bisoi (04)Tarakeshwar Das (49)

THE DULUX LAMP

GLOBAL ILLUMINATING (GI)

Group-IV

GINA has come across a new product opportunity in

light source i.e. CFL Lamps

CFL lamps has many advantages compared to

incandescent bulbs

CFL Lamps lasts ten times as long and consumes

1/5th the energy

In order to test the new product, GINA convinced FLS

(Farnham Lighting Service) to select & propose a

small customer

FLS proposed the “Stardust Casino” to convert from

incandescent to CFL bulbs

Given Data - Stardust Casino

Group-IV

15000 – Incandescent fixtures (50 & 100 watts bulbs) 2000 – Fluorescent fixtures(25 watts bulbs) Timings – 24 x 365 Hours per year Light source requirement - 24 x 365 Hours per year Standard Practice Followed – Group re-lamping at 80% of

the bulbs expected life Frequency of re-lamping: 8 times – Incandescent bulbs &

1.4 times for Fluorescent Bulbs Average labor rate: $20 per hour Average of 5 minutes to change each bulb, and equipment

rental at about $300/day, Estimated Cost of time lost in re-lamping – 1,00,000 (Each

Year)

Group-IV

CONTEXT OF THE CASE

18-watt CFL bulb provides comparable light to a 100-watt incandescent bulb

9-watt CFL bulb provides comparable light to a 25 & 50 -watt incandescent bulb

CFL Bulb lasts 10,000 hours, versus incandescent bulb about 1,000 hours

The normal incandescent 100-watt bulb costs about 18 cents to manufacture and

sells retail for about $1.20

The CFL 18-watt bulb can cost up to $3-$4 to manufacture

The ten times life and 80% energy savings are important factors in determining

the price for CFL Bulbs

The retail selling price is yet to be determined

!!

Group-IV

CALCULATION OF EVC TO THE CASINO

POWER COST IN TRADITIONAL SYSTEM

  nos total WH kwh cost

room bulbs(100 watt) 9000      

hall bulbs(50 watts) 1000 438000000 438000 61320

casino bulbs(100 watts) 5000 4380000000 4380000 613200

casino bulbs(25 watts) 2000 438000000 438000 61320

        735840

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areabulb watt nos total watt HR KWH Cost

hall bulbs 9 1000 78840000 78840 11037.6

casino bulbs 18 5000 788400000 788400 110376

casino bulbs 9 2000 157680000 157680 22075.2

          143488.8

POWER COST IN NEW SYSTEM

CALCULATION OF EVC TO THE CASINO

100 watt to be replaced by 18 watt50 & 25 watt bulbs to be replaced by 9 watt

Power cost saving by implementing new system=592351.2

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Saving on labor cost

  noschanging freq/yr total bulbs total hrs

total days

Total Labor Cost

  incandecent  bulb  to be changed 6000 8 48000 4000    florocent  bulbs  to  be changed 2000 1.4 2800 233.3333    

      50800 4233.333 76 97280

CALCULATION OF EVC TO THE CASINO

Calculation

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power cost saving calculation

Annual Installment for Loan Payment

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Retrofit Cost Calculation

Quantity Cost/UnitTotal Cost Gross Margin

Effective Cost

Wall Fixture 3000 30 90000 40% 126000

Overhead Fixture 5000 35 175000 40% 245000

Total Retrofit Cost 371000

Annual Installment for Loan Payment= $ 54,471.79

Total Savings Achieved per CFL Bulb

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Total saving on 9 watt bulb 59.87198849

Total saving on 18 watt bulb 130.5943885

Pricing Strategy

Factors Considered for Pricing Strategy Cost of Manufacturing CFL Bulb - $ 3 to 4 Total Savings achieved Total saving on 9 watt bulb – $ 60 Total saving on 18 watt bulb - $ 130.5943885 Hence we can consider 15% discount on 9 watt bulb - $ 64 18 watt bulb - $ 134

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Pricing Strategy Calculation

Final Price arrived

For 9 Watt Bulb we can price at $ 54.4

For 18 Watt Bulb we can price at $ 114

We can even price it at a lower slab as we are arriving at the final pricing strategy by cost of saving as the manufacturing cost is a small amount

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Group-IV