Multidimensional linear performance pricing analysis of gear forgings

Abstract

Multidimensional linear performance pricing analysis, also known as cost or price regression analysis, was conducted for a sample of over one hundred gear forgings with varying steel grades and geometrical characteristics supplied by AGCO. Additionally, some of the analysed products had been pre-machined, whereas the remainder were raw forgings. The hypothesis that material weight was the most significant value driver was confirmed, additionally geometrical characteristics had substantially less influence. It was also established that whether a purchased forging was pre-machined or a raw forging was of moderate significance and economically favourable for parts with low technical values. Inclusion of material weight and pre-machining indicators as value drivers led to the development of a highly robust statistical model which was further supported qualitatively by interviews with experts, both internal and external to AGCO, as well as examined quantitatively and calibrated using cost-based price models. Finally, clear cost savings could be reached on the basis of the produced model.