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An Activity-Based Costing Method for Product Family Design in the Early Stages of Development

[+] Author Affiliations
Jaeil Park, Timothy W. Simpson

Pennsylvania State University, University Park, PA

Paper No. DETC2005-84817, pp. 959-968; 10 pages
doi:10.1115/DETC2005-84817
From:
  • ASME 2005 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference
  • Volume 2: 31st Design Automation Conference, Parts A and B
  • Long Beach, California, USA, September 24–28, 2005
  • Conference Sponsors: Design Engineering Division and Computers and Information in Engineering Division
  • ISBN: 0-7918-4739-X | eISBN: 0-7918-3766-1
  • Copyright © 2005 by ASME

abstract

As the marketplace is changing so rapidly, it becomes a key issue for companies to best meet customers’ diverse demands by providing a variety of products in a cost-effective and timely manner. In the meantime, an increasing variety of capability and functionality of products has made it more difficult for companies that develop only one product at a time to maintain competitive production costs and reclaim market share. By designing a product family based on a robust product platform, overall production cost can be more competitive than competitors selling one product at a time while delivering highly differentiated products. In order to design cost-effective product families and product platforms, we are developing a production cost estimation framework in which relevant costs are collected, estimated, and analyzed. Since the framework is quite broad, this paper is dedicated to refining the estimation framework in a practical way by developing an activity-based costing (ABC) system in which activity costs are mapped to individual parts in the product family, which is called cost modularization, and the activity costs affected by product family design decisions are reconstructed to make the costs relevant to these decisions. A case study involving a family of power tools is used to demonstrate the proposed use of the ABC system.

Copyright © 2005 by ASME
Topics: Design

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