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ContentContent
Product life cycle costProduct life cycle costDesign related costsDesign related costs
Cost estimation approachesCost estimation approachesAn analogous approach for cost estimationAn analogous approach for cost estimation
for prototypefor prototype
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Life cycle costLife cycle cost
Design related costs (Cost BreakdownDesign related costs (Cost BreakdownStructure)Structure)
Production and construction costProduction and construction costManufacturing management, manufacturing, quality control,Manufacturing management, manufacturing, quality control,initial logistic supportinitial logistic support ……
Operation and support cost (the most significant andOperation and support cost (the most significant andthe most difficult to predict)the most difficult to predict)Product operation, product distribution, product maintenance,Product operation, product distribution, product maintenance,inventoryinventory ……
Retirement and disposal cost (difficult to assessRetirement and disposal cost (difficult to assessquantitatively)quantitatively)Disposal of nonDisposal of non --repairable, product retirement,repairable, product retirement,documentationdocumentation ……
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Cost Estimating ModelsCost Estimating Models
Parametric modelsParametric models
Generation and application of equations thatGeneration and application of equations thatdescribe relationships between cost anddescribe relationships between cost andmeasurable attributes of a productmeasurable attributes of a productBased on historical and empirical dataBased on historical and empirical dataUsing statistical methods (regressionUsing statistical methods (regression
analysis)analysis)Not good for estimating the cost of productsNot good for estimating the cost of productsthat utilize new technologiesthat utilize new technologies
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Cost Estimation ApproachesCost Estimation Approaches
Analogous modelsAnalogous models
Identifies a similar product or component andIdentifies a similar product or component andadjusts the cost for differences between it andadjusts the cost for differences between it andtarget producttarget productHigh degree of expert judgment requiredHigh degree of expert judgment requiredTends to be good for new productsTends to be good for new products
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Cost Estimation ApproachesCost Estimation Approaches
GenerativeGenerative --analytical (detailed) modelsanalytical (detailed) models
Depicts the relevant processes of productDepicts the relevant processes of productcreation in detail and derives the costscreation in detail and derives the costsincurred, aggregating them properlyincurred, aggregating them properly
Direct cost: labor, materialDirect cost: labor, material ……Indirect/overhead costIndirect/overhead cost
Extremely time consuming, very detailedExtremely time consuming, very detailed
knowledge of the product and processesknowledge of the product and processesrequiredrequiredThe most accurate cost estimation approachThe most accurate cost estimation approach
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Life Cycle Cost Analysis ModelsLife Cycle Cost Analysis Models
ConceptualConceptualA set of hypothesized relationships expressed in a qualitativeA set of hypothesized relationships expressed in a qualitative
frameworkframeworkFlexible and constructed at macro levelFlexible and constructed at macro levelLittle ability to quantify the cost characteristicsLittle ability to quantify the cost characteristics
AnalyticalAnalyticalBased on mathematical relationships describing a certain aspectBased on mathematical relationships describing a certain aspectof a product under certain conditionsof a product under certain conditionsLimited ability to reflect the actual systemsLimited ability to reflect the actual systems ’’ performanceperformance
HeuristicHeuristicProduces a feasible and sufficing solution but does notProduces a feasible and sufficing solution but does notguarantee an optimal solutionguarantee an optimal solutionOnly be used for the specific situation for which they areOnly be used for the specific situation for which they areintendedintended
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemThe same/similar cost information would beThe same/similar cost information would be
related to products with same/similarrelated to products with same/similarcharacteristicscharacteristicsLife Cycle Cost (LCC) modelLife Cycle Cost (LCC) model
LCC (p): Life cycle cost of a product pLCC (p): Life cycle cost of a product pLCC (LCC ( cc ii): Life cycle cost of a component): Life cycle cost of a component cc ii
N: number of components for p
)()(1
i
N
i
c LCC p LCC ∑=
=
N: number of components for p
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemLCC of componentLCC of component cc ii is composed of fouris composed of four
categories according to Cost Breakdowncategories according to Cost BreakdownStructure (CBS)Structure (CBS)
LCC(cLCC(cii) =) = CC
dd+ C+ C
pp+ C+ C
uu+ C+ C
rrEach categories of cost is subEach categories of cost is sub --divided intodivided intoa list of costsa list of costs
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemResearch and Development CostResearch and Development Cost CC dd
Normally it may not be of interest to theNormally it may not be of interest to thedesign,design, CC dd = 0= 0
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemProduction cost CProduction cost C pp
LaborLaborMaterialMaterial
MachineMachineOverheadOverhead
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemUse cost (operation and maintenanceUse cost (operation and maintenance
cost) Ccost) C uu
LaborLabor
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemRetirement and disposal cost CRetirement and disposal cost C rr
LaborLabor
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemIdentify a list of componentIdentify a list of componentcharacteristics/features used for computingcharacteristics/features used for computingsimilaritysimilarityTo search for similar components, representsTo search for similar components, representscomponents in the form of points in multicomponents in the form of points in multi --dimensional feature spacedimensional feature spaceThe degree of similarity is computed as a factorThe degree of similarity is computed as a factorof the distance between the pointsof the distance between the points
The estimated cost for target component can beThe estimated cost for target component can beadjusted based on the similarity differenceadjusted based on the similarity differencebetween it and its neighborsbetween it and its neighbors
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An Analogous Approach forAn Analogous Approach for
Prototype SystemPrototype SystemCritical issue:Critical issue:
Historical cost dataHistorical cost data
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Future improvementFuture improvement
Identify the product features that mostlyIdentify the product features that mostly
affect LCC (Feature Selection)affect LCC (Feature Selection)Predict LCC using machine learningPredict LCC using machine learning
algorithms: SVMalgorithms: SVM
