Mae 400 Final Presentation

Final Project Proposal Report

Group 7 (Magneto cup)  Members:

Anthony Vengoechea, WiLLem Vera, Emilio Torres,Corey Vorsanger

Figure 1: Conceptual Design 1

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                                                                Executive Summary

This report explains how a team of five engineers are planning to design, manufacture, test, and market a revolutionary tap and cup design. The initial target market is restaurants, bars, sports arenas, and large venues. The current number of restaurants and bars that are in the US is approximately 611,566, and this industry is growing at a rate of 6% per year.

Sport arenas alone can make up a large part of our possible revenue. With major sports arenas selling more than two hundred million dollars per year in alcohol alone.  Furthermore, additional revenue can be made by allowing our customers to market through our product and use the magnet as a promotional advertisement.  

The manufacturing of this product will be made in china while the systems will be assembled in the U.S. Also, the Magneto system includes a zero waste pump that limits the amount of alcohol wasted when filling the cup. In addition the system will use a liquid nitrogen heat exchanger to chill the beverage rapidly.  

The cost estimate for the base model is $3000. This leaves a profit margin of 40% when the magneto system is sold to the consumer at $5000. Other possibilities include selling the cup with a $0.52 cost estimate giving a profit margin of 74% when the cups are sold at $2 apiece. Currently, most large venues only make a 40 percent profit on beverages sold. While this is very good, the magneto system seeks to reduce the vendors cost and improve the customer’s experience.

A five year expansion plan will be used for this product. Initially the magneto system will start in large American arenas and stadiums for the year. Slowly migrating to college stadiums, and franchise bars for the next two years. Then entering the world market and establishing a household name for the last two.

This results in predicted profits of over the next five years is over $$$ dollars.  Based off of these estimates and the net present values for each year the internal rate of return is %%.  The team will follow the business model and develop the company through the years by updating the manufacturing equipment and improving the online sales store, making the company more efficient and decreasing the costs.

Note: 25% of head is actual beer!

Advertisements Options: (Cost per cup $ 0.16)