Request for Proposal - Thruster Manufacturing

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Pricing Information

Historically, AeroFab has earned a 15% profit margin on all of its products. However, the CEO has learned that current satellite contracts sometimes command up to 20% profit margins. AeroFab could also take less than 15% profit margin to win the business. You need to decide what the profit margin should be.

Your proposal to Plenti-Sat should include:

- An introduction to AeroFab, Inc. - background in the industry, years in business, etc.

- A description of your technical approach including:

- Manufacturing method choice

- Rationale for that choice

- A clear graphical way of showing your trades to your potential customer, and why that information led you to your final choice.

- Pricing information

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- You need to decide how much to charge for the non-recurring engineering labor to do the design. You can pass all of the cost on to Plenti-Sat, some of it, or none of it. Having a new design might be in AeroFab’s best long-term interest, but you have to decide whether Plenti-Sat’s order is big enough to warrant the non-recurring investment and if you could use this thruster for other customers and recover your non-recurring costs through them. However, maybe even breaking even is fine because you’ll be able to keep valuable members of your staff employed. You also need to decide on the recurring price for the thrusters. Finally, you need to decide what your profit margin should be. Plenti- Sat is expecting your quote to be one number for their contract that incorporates all of these variables for 50 thrusters. You should also consider the numbers for what the eventual order of 250 thrusters would be.

- Conclusion

o Why should Plenti-Sat chose AeroFab over your competitors like Qwik Machining?

Make convincing concluding arguments to answer this question.

Your internal charts to AeroFab Management should include:

Not only do you have to convince Plenti-Sat to accept your proposal and award AeroFab the contract, you also have to convince your management to make the necessary investment should you win. You have 5 minutes at the next executive management meeting to make your case. You get exactly two charts. At a minimum, here is what you need to discuss:

- How much investment in labor and equipment is required to support the Plenti-Sat contract should you win it?

- How many thruster assemblies would you have to make to amortize the cost of the investment in the manufacturing equipment?

- How could the equipment you are proposing to purchase be used in the future?

- Why should AeroFab make the investment?

- What is the profit margin you have used to write the Plenti-Sat proposal? Why should your audience accept your choice?