1. Inkjet Recycling Cost Analysis Important Cost Factors to Consider OR LEARNING TO CONTROL THE SEEMINGLY UNCONTROLABLE! W2/ Rm. Venetian D 1:00-2:30 PM Benjamin A Lyles Legacy Manufacturing, LLC

2. Program Outline Quality Report Visual Inspection Circuit Test Performance Sample Cost Analysis

3. QUALITY REPORT All documents within a company must have a practical function. - Supplier - Invoice and packing list information - QC tests and tests results - Distribution - Archiving

4. VISUAL INSPECTION Correct part number - Is it a 23D and not a 41A Correct count (packing list) - Received only 95, not 100 Physical damage - Cracks, missing nozzle plates, etc. Packaging procedures - Proper protection for circuits, etc.

5. CIRCUIT TEST General Averages HP45/15: 1-2% HP26: 2-3% HP29/20/78/56/57: 6-8% HP49/23: 8-15% Lexmark 70/80/16/26: 8-12%

6. PERFORMANCE SAMPLE How do you REALLY know a component conforms to incoming specifications? - Randomly pick from different boxes or randomly from the same box - Sample size is dependent on number size of lot, but be practical - Have an established criteria for approval or rejection; >75% PASS

7. COST ANALYSIS (Core/cost factor) + (Material/cost factor)+ (Labor/cost factor) + Overhead + Miscellaneous= Cost of Sellable Cartridge

8. CORE Example: 500 ea. HP45A @ $5/ea. - Circuit Failure: 7 ea. (1.4%) - Damaged: 5 ea. (1%) - Non-virgin: 2 ea. (<1%) - Failed print test: 45 (9%) Core Cost Factor: 1 – (59/500) = 0.882

9. MATERIAL Example: 500 – 14 = 486 cartridges to recycle Ink Cost Factor: 1 – (45/486) = 0.907 Seal Cost Factor: 1 – (45/486) = 0.907 Label Cost Factor: 1

10. LABOR Example: Inspection Labor: 500 x $0.10 = $50 Process Labor Cost Factor: 1 – (45/486) = 0.907 Packaging Labor Cost Factor: 1

11. OVERHEAD & MISC. Example: Overhead per sellable cartridge: $1.25 Miscellaneous: Shipping costs of cores: $100/500=$0.20

12. TOTALS Example: Core: $5.00 / 0.882 = $5.67 Ink: $0.74 / 0.907 = $0.82 ($7/#; 48 grams/cart.) Seal: $0.05 / 0.907 = $0.06 Other materials (tape, clip, label, box, etc.): $0.75 Labor: $0.10 + $1.50 / 0.907 + $0.15 = $1.90 Overhead: $1.25 Miscellaneous: $100/500 = $0.20 Total: $5.67+$0.82+$0.06+$0.75+$1.90+$1.25+$0.20 $10.65 cost per cartridge

13. COST REDUCTIONS In-house collection: 250 @ $2 ea. Core: ($5.00/0.882 + $2.00/0.95)/2= $3.89 Ink: $0.74 / 0.93 = $0.80 ($7/#; 48 grams/cart.) Seal: $0.05 / 0.93 = $0.05 Other materials (tape, clip, label, box, etc.): $0.75 Labor: $0.10 + $1.50 / 0.93 + $0.15 = $1.86 Overhead: $1.25 Miscellaneous: $50/500 = $0.10 Total: $3.89+$0.80+$0.05+$0.75+$1.86+$1.25+$0.10 $8.70 cost per cartridge

14. CONCLUSION - START WITH A PLAN - CREATE A SYSTEM FOR DOCUMENTATION - CONTROL, CONTROL, CONTROL - ANALYZE, ANALYZE, ANALYZE, - FIND YOUR FINAL COST - REDUCE COSTS AS YOU GO - DECIDE IF PSYCHIATRIC HELP IS NEEDED

15. Benjamin Lyles VP Engineering Legacy Manufacturing 518 17 th St. Ste. 1630 Denver, CO 80202 benlyles@legacyllc.com 303-446-2919 benlyles@legacyllc.com