November 23, 2024
Cost Estimation and Comparison for Bulk Orders of Starbucks Mug Packaging Boxes
Case Background
Client Requirement: Production of 50,000 Starbucks mug packaging boxes with a top-and-bottom lid structure
Material: 150 GSM imported kraft paper and 1.5mm single-sided kraft paper grayboard
Process: Standard 4C printing with varnish coating for protection
Structure: Top-and-bottom lid design, unfolded size 35cm × 38cm
Production Conditions: Bulk production with economies of scale, resulting in a unit price of 3.37 CNY/box (system estimation).
Cost Structure Analysis for Bulk Orders
At a production scale of 50,000 units, significant economies of scale become evident, particularly in the following areas:
- Material Cost Reduction
- Both the surface paper and grayboard are purchased by the ton. Bulk purchasing typically yields a 5%-10% discount compared to small-batch purchasing.
- Bulk cutting reduces material waste, further optimizing raw material usage.
- Process Cost Allocation
- Die-cutting fees (150 CNY) and printing plate fees (460 CNY) are amortized over 50,000 units, reducing unit costs to nearly zero.
- Machine setup costs are distributed across the large order, lowering trial costs.
- Labor Cost Efficiency
- Mechanization replaces some manual operations in large-scale production, significantly lowering per-unit labor costs.
- Assembly efficiency improves, reducing labor costs to “less than 1 CNY per unit”.
- Transportation and Management Cost Optimization
- Transportation and management costs also decrease with the larger order volume.
2. Cost Comparison
3. Core Reasons for Cost Optimization
- Economies of Scale
- For large orders, fixed costs such as die-cutting, printing, and cutting are distributed across 50,000 units, making their impact on per-unit costs negligible.
- Mechanized Production
- Many processes (e.g., cutting, assembly) can be completed by automated equipment during bulk production, significantly reducing labor costs.
- Lower Material Procurement Costs
- Bulk purchasing provides greater room for negotiation, directly reducing material costs.
4. Unit Price Comparison and Value Representation
5. Conclusion
The results of this estimation highlight the critical impact of order volume on unit price. Small-batch orders have high per-unit costs primarily because fixed expenses cannot be amortized, and labor costs take up a larger proportion. In contrast, bulk orders achieve significant cost reductions through the following:
- Discounted Material Procurement
Bulk purchasing lowers raw material costs.
- Production Automation
Mechanized equipment replaces manual labor, improving production efficiency.
- Amortization of Fixed Costs
Fixed costs, such as die-cutting, printing, and cutting, are distributed over the large volume, reducing per-unit costs to near zero.
Through bulk production optimization, the total cost is “168,500 CNY”, with a unit price of “3.37 CNY/box”, demonstrating the value of economies of scale in custom packaging solutions.
