Practical Process of RMG Industry

How a Merchandiser Makes Fabric Price Consumption and Cost?

How a Merchandiser Makes Fabric Consumption and Cost

Makes Fabric Consumption 

Price of the Product:


Generally the price of the product is determined by the conversation between merchandiser and buyer. At first, the local merchandiser (factory) quotes the price of the product and then sends it to the foreign buyer’s merchandiser. The foreign buyer’s merchandiser approves the quoted price by discussion with the buyer of that product. The prices of some products are given below:

Ladies T-Shirt : 3.69 US $ per piece

Gents T-Shirt : 3.55 US $ per piece

Hooded jacket : 4.60 US $ per piece

Kid’s Shirt : 3.00 US $ per piece

Pull over : 5.40 US $ per piece

Costing of Product:


After getting an order from buyer and the merchandiser calculates the consumption of yarn, fabric, garments accessories etc.

Suppose for an order -

Order item : T-Shirt (4500 pieces)

Fabrics : 100% Cotton, Single Jersey

GSM : 155 to 160

Condition : Enzyme wash + Soft Finished

Size :

- Body Length : 40.00cm

- Sleeve Length : 38.00cm

- ½ Chest : 20.00cm

Consumption:


In the garments trade, consumption means quantity of raw materials with a view to determine the price of a garment. In order to calculate the quantity how much fabric, sewing thread, zipper, button and other accessories are required to produce a garment up to the exporting is called consumption.

Internationally fabrics having five types of width as in 35 inch, 45 inch, 50 inch, 60 inch. Generally it is visible that after consumption of fabrics, we have to perform some washing, brushing or finishing treatment to develop fabric quality. After performing the above treatment, fabric shrinks 1 to 2 inch from dimension.

In the circumstances stated above during fabric consumption, we should consume fabric excluding 1 to 2 inch from the fabric width. Otherwise, in some cases buyer of factory authority may encounter a great loss or may face adversity.


Consumption Procedure:


- Yarn Consumption depends on the fabric consumption. Generally 15% allowance is added.

- Fabric Consumption for the above mentioned order:

Calculation:

(B.L + S.L + 10 cm allowance) * (1/2 Chest + 5 cm) * 2 * GSM * 12 * 110%
---------------------------------------------------------------------------------------------
   100 * 100 * 1000



.          (40 + 38 + 10) * (20 + 5) * 2 * 160 * 12 * 1.10
= ---------------------------------------------------
.             100 * 100 * 1000


= 0.92928 kgs/ dozen

= 0.93 kgs/dozen

Dia selection:


.              {(1/2 Chest + 5) + (1/2 Chest + 5)}
=  ---------------------------------------------------
.             2.54

= 40.125 + 2cm extra fabric

= 42 cm tube diameter for knitting.


Pricing of the Product:


Yarn charge : 0.93 kgs × $ 3.10 = $ 2.883

Lycra yarn charge : = $ 0.00

Knitting charge : 0.93 kgs × $ 0.15 = $ 0.1395

Dyeing charge : 0.93 kgs × $ 0.40 = $ 0.372

Dyeing & finishing charge : 0.93 kgs × $ 0.30 = $ 0.279

Trimmings (all accessories) : = $ 2.00

Cutting & making charge : = $ 4.00

Printing charge : = $ 0.00

Embroidery charge : = $ 0.00

Test charge : = $ 0.45

Zipper charge : = $ 0.00


Total = $ 10.1215 per dozen

= $ 0.8435 per piece


Now the cost of the above mentioned product is USD 0.8435 + 5% commission for buying house. So the product cost is US $ 2.313. In the above way costing of the product is done.

How to prepare a price quotation for buyers:


There are three processes for fixation of export prices which are as under:

- FOB (Free On Board);

- C & F (Cost & Freight);

- CIF (Cost, Insurance and Freight).

FOB means ‘Free On Board’ i.e. exporter does not bear the cost of freight of ship or air. It is buyer (importer) who himself bears the freight of ship or air.

C & F means ‘Cost & Freight’ i.e. FOB + Freight = C & F

In the case of ship or air, freight is carried by the exporter while quoting price, the exporter quotes price a bit higher than FOB. The whole responsibility including the sending of goods to the selected port of the importer is shouldered by the exporter ship or air. Freight may vary from place to place and shippers to shippers.


CIF means ‘Cost, Insurance and Freight’. In this case, in addition to the bearing freight the cost of insurance is also borne by the exporter. The exporter while quoting CIF price, quotes much higher than C & F value i.e. C & F + Insurance = CIF.


Normally we can add 1% to 1/2 % insurance charge with CIF price. During the fixation of FOB price following notes are to be followed carefully:

- Cost of fabric per dozen. Garments (woven/knit) or cost of yarn

per dozen/garments in case of sweater.

- Cost of accessories per dozen/garments.

- CM (Cost of Manufacturing) per dozen/garments.

- Cost of transportation from factory to sea port or airport.

- Clearing and forwarding cost.

- Overhead cost.

- Commission or profit.

The above notes are applicable in case of sending goods abroad on FOB basis.



Engr. Kh. Mashiur Rahman Email: garmentspedia@gmail.com

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