Development of a production cost estimation framework for product family design

The main task of a product family designer is to decide the right components/design variables to share among products to maintain economies of scale with minimum sacrifice in the performance of each product in the family. The decisions are usually based on several criteria, but production cost is of primary concern. Estimating the production cost of a family of products involves estimating the production cost of each product in the family including the cost effects of common and variant components/design variables in the family. In this paper, we introduce a production cost estimation framework for product family design based on Activity-Based Costing (ABC), which is composed of three stages: (1) allocation, (2) estimation, and (3) analysis. In the allocation stage, the production activities that are necessary to produce all of the products in the family are identified and modeled with an activity table, a resource table, and an activity flow. To allocate the activities to products, a product family structure is represented by a hierarchical classification of the items that form the product family. In the estimation stage, production costs are estimated by converting the production activities to costs using key cost drivers that consume main resources. In the analysis stage, components/design variables for product family design are investigated with resource sharing methods through activity analysis. As an example, the proposed framework is applied to estimate the production cost of a family of cordless power screwdrivers.