Table 5. Illustrative E-Matrix for an...

Table 5.

Illustrative E-Matrix for an electronics company (annual costs in €, eval. Period 3 yrs, discount rate 12%)

Project ID	Targeted causal loss (description)	Origin location (of causal loss)	Improvement technique	K_Ch (€/yr)	r	Gross saving (€/yr)	I₀ (€)	O (€/yr)	Net saving (€/yr)	NPV (€) @3yrs	PI	IRR (%)
P1	Inadequate soldering training	QMS/HR (training dept.)	IPC-A-610 Certification	35,500	0.80	28,400	10,000	1,000	27,400	55,826	6.58	$>$ 100%
P2A	Poor PSU quality	Supplier X (incoming mat. System)	Joint QI programme with supplier alpha	10,000	0.60	6,000	5,000	500	5,500	8,210	2.64	$\approx$ 45%
P3	Incorrect AOI test parameters	ICT (In-Process control)	AOI vendor optimisation	6,250	0.70	4,375	4,000	200	4,175	6,027	2.51	$\approx$ 40%
P4	Outdated SMT feeder calibration	SMT M/C A (production)	Implement predictive maint.	12,500	0.75	9,375	7,000	800	8,575	13,594	2.94	$\approx$ 55%
P5	Inadequate design review	Engineering dept.	Formal design review process	13,000	0.65	8,450	6,000	700	7,750	12,520	3.09	$\approx$ 50%
P6	Poor component kitting	Supplier and incoming system	Enhanced supplier audits	7,200	0.70	5,040	3,000	400	4,640	8,145	3.71	$\approx$ 65%

Project ID	Targeted causal loss (description)	Origin location (of causal loss)	Improvement technique	K_Ch (€/yr)	r	Gross saving (€/yr)	I₀ (€)	O (€/yr)	Net saving (€/yr)	NPV (€) @3yrs	PI	IRR (%)
P1	Inadequate soldering training	QMS/HR (training dept.)	IPC-A-610 Certification	35,500	0.80	28,400	10,000	1,000	27,400	55,826	6.58	$>$ 100%
P2A	Poor PSU quality	Supplier X (incoming mat. System)	Joint QI programme with supplier alpha	10,000	0.60	6,000	5,000	500	5,500	8,210	2.64	$\approx$ 45%
P3	Incorrect AOI test parameters	ICT (In-Process control)	AOI vendor optimisation	6,250	0.70	4,375	4,000	200	4,175	6,027	2.51	$\approx$ 40%
P4	Outdated SMT feeder calibration	SMT M/C A (production)	Implement predictive maint.	12,500	0.75	9,375	7,000	800	8,575	13,594	2.94	$\approx$ 55%
P5	Inadequate design review	Engineering dept.	Formal design review process	13,000	0.65	8,450	6,000	700	7,750	12,520	3.09	$\approx$ 50%
P6	Poor component kitting	Supplier and incoming system	Enhanced supplier audits	7,200	0.70	5,040	3,000	400	4,640	8,145	3.71	$\approx$ 65%

Note(s):

K_Ch values from C-Matrix (Table 3). PVIFA (12%, 3yrs) $\approx$ 2.4018. For P1: PV Net Savings = €27,400 * 2.4018 = €65,810. NPV = €65,810 - €10,000 = €55,810 (slight rounding difference from table). PI = €65,810 / €10,000 = 6.58. IRR values are illustrative and would be calculated using financial software

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