Product life cycle cost analysis: State of the art review

Abstract

In an attempt to improve the design of products and reduce design changes, cost, and time to market, concurrent engineering or life cycle engineering has emerged as an effective approach to addressing these issues in today's competitive global market. As over 70% of the total life cycle cost of a product is committed at the early design stage, designers are in a position to substantially reduce the life cycle cost of the products they design, by giving due consideration to life cycle cost implications of their design decisions. Increasing recognition of cost competition has spurred the development of methodologies such as design for manufacturability, design for assembly (DFA), design for producibility, design for maintainability and design for quality, in the design for 'X' realm. Although these methodologies have for the most part proven successful in reducing cost, the design evaluation criterion in most of these methodologies is not cost. Therefore methodologies and tools are needed to directly provide cost information to designers. Life Cycle Cost (LCC) analysis provides a framework for specifying the estimated total incremental cost of developing, producing, using, and retiring a particular item. This paper looks at the issues of LCC analysis and the tools that have been developed to provide engineers with cost information to guide them in design.