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Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project [1] or the construction of a building. [2] In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels. [3]
Kaizen costing is a cost reduction system used a product's design has been completed and it is in production. [1] Business professor Yasuhiro Monden [2] defines kaizen costing as . The maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level. [citation needed]
The process of target costing can be divided into three sections: the first section involves in market-driven target costing, which focuses on studying market conditions to identify a product's allowable cost in order to meet the company's long-term profit at expected selling price; the second section involves performing cost reduction ...
Labor cost reduction 30% 15% 50% Space reduction 50% 30% 33% 40% WIP stock reduction 22 days to 1 day Production increase 100% Quality improvement 30% scrap, 79% rework 80% scrap 30% scrap & rework Throughput time reduction 50% 17 days to 30 hours Standard hours reduction 50% No. of shipments increase 20%
In business economics cost breakdown analysis is a method of cost analysis, which itemizes the cost of a certain product or service into its various components, the so-called cost drivers. The cost breakdown analysis is a popular cost reduction strategy and a viable opportunity for businesses.
Design-to-Cost (DTC), as part of cost management techniques, describes a systematic approach to controlling the costs of product development and manufacturing.The basic idea is that costs are designed "into the product", even from the earliest concept decisions on and are difficult to remove later.
Manufacturing cost is the sum of costs of all resources consumed in the process of making a product. The manufacturing cost is classified into three categories: direct materials cost , direct labor cost and manufacturing overhead . [ 1 ]
Process costing is an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process. [1] Costs are assigned to products, usually in a large batch, which might include an entire month's production. Eventually, costs have to be allocated to individual units of product.