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

2005 ◽  
Author(s):  
Jaeil Park ◽  
Timothy W. Simpson
Keyword(s):  
Cost Estimation ◽  
Production Cost ◽  
Product Family ◽  
Cost Effective ◽  
Production Costs ◽  
Activity Based Costing ◽  
Product Family Design ◽  
Product Families ◽  
Product Platforms ◽  
Activity Costs

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.

A Product Dissection-Based Methodology to Benchmark Product Family Design Alternatives

2009 ◽  
Vol 131 (4) ◽  
Author(s):  
Henri J. Thevenot ◽  
Timothy W. Simpson
Keyword(s):  
Product Family ◽  
Cost Savings ◽  
Production Costs ◽  
Manufacturing Cost ◽  
Successful Implementation ◽  
Product Family Design ◽  
Potential Cost ◽  
Product Families ◽  
Product Platforms ◽  
Design Alternatives

Today’s companies are pressured to develop platform-based product families to increase variety, while keeping production costs low. Determining why a platform works, and alternatively why it does not, is an important step in the successful implementation of product families and product platforms in any industry. Internal and competitive benchmarking is essential to obtain knowledge of how successful product families are implemented, thus avoiding potential pitfalls of a poor product platform design strategy. While the two fields of product family design and benchmarking have been growing rapidly lately, we have found few tools that combine the two for product family benchmarking. To address this emerging need, we introduce the product family benchmarking method (PFbenchmark) to assess product family design alternatives (PFDAs) based on commonality/variety tradeoff and cost analysis. The proposed method is based on product family dissection, and utilizes the Comprehensive Metric for Commonality developed in previous work to assess the level of commonality and variety in each PFDA, as well as the corresponding manufacturing cost. The method compares not only (1) existing PFDAs but also (2) the potential cost savings and commonality/variety improvement after redesign using two plots—the commonality/variety plot and the cost plot—enabling more effective comparisons across PFDAs. An example of benchmarking of two families of valves is presented to demonstrate the proposed method.

A Method for Benchmarking Product Family Design Alternatives

2007 ◽  
Author(s):  
Henri J. Thevenot ◽  
Timothy W. Simpson
Keyword(s):  
Product Family ◽  
Cost Savings ◽  
Production Costs ◽  
Manufacturing Cost ◽  
Successful Implementation ◽  
Product Family Design ◽  
Potential Cost ◽  
Product Families ◽  
Product Platforms ◽  
Design Alternatives

Today’s companies are pressured to develop platform-based product families to increase variety while keeping production costs low. Determining why a platform works, and alternatively why it does not, is an important step in the successful implementation of product families and product platforms in any industry. Internal and competitive benchmarking is essential to obtain knowledge of how successful product families are implemented, thus avoiding potential pitfalls of a poor product platform design strategy. While the two fields of product family design and benchmarking have been growing rapidly lately, we have found few tools that combine the two for product family benchmarking. To address this emerging need, we introduce the Product Family Benchmarking Method (PFBenchmark) to assess product family design alternatives (PFDAs) based on commonality/variety tradeoff and cost analysis. The proposed method utilizes the Comprehensive Metric for Commonality developed in previous work to assess the level of commonality and variety in each PFDA, as well as the corresponding manufacturing cost. The method compares not only (1) existing PFDAs but also (2) the potential cost savings and commonality/variety improvement after redesign using two plots — the Commonality/Variety Plot and the Cost Plot — enabling more effective comparisons across PFDAs. An example of benchmarking two families of valves is presented to demonstrate the proposed method.

Development of a Production Cost Estimation Framework for Product Family Design

2004 ◽  
Author(s):  
Jaeil Park ◽  
Timothy W. Simpson
Keyword(s):  
Cost Estimation ◽  
Production Cost ◽  
Economies Of Scale ◽  
Product Family ◽  
Production Costs ◽  
Main Task ◽  
Primary Concern ◽  
Product Family Design ◽  
Design Variables ◽  
The Family

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.

Production Cost Modeling to Support Product Family Design Optimization

2003 ◽  
Author(s):  
Jaeil Park ◽  
Timothy W. Simpson
Keyword(s):  
Production Cost ◽  
Cost Model ◽  
Product Family ◽  
Optimization Methods ◽  
Production Costs ◽  
Product Platform ◽  
Product Family Design ◽  
The Family ◽  
The Individual ◽  
Decision Based Design

Product family design involves carefully balancing the commonality of the product platform with the distinctiveness of the individual products in the family. While a variety of optimization methods have been developed to help designers determine the best design variable settings for the product platform and individual products within the family, production costs are thought to be an important criterion to choose the best platform among candidate platform designs. Thus, it is prerequisite to have an appropriate production cost model to be able to estimate the production costs incurred by having common and variant components within a product family. In this paper, we propose a production cost model based on a production cost framework associated with the manufacturing activities. The production cost model can be easily integrated within optimization frameworks to support a Decision-Based Design approach for product family design. As an example, the production cost model is utilized to estimate the production costs of a family of cordless power screwdrivers.

scholarly journals Product platform design and customization: Status and promise

2004 ◽  
Vol 18 (1) ◽  
pp. 3-20 ◽  
Author(s):  
TIMOTHY W. SIMPSON
Keyword(s):  
Product Development ◽  
Product Family ◽  
Lead Times ◽  
Product Platform ◽  
Product Family Design ◽  
Research Activity ◽  
Global Marketplace ◽  
Product Families ◽  
Web Based ◽  
Product Platforms

In an effort to improve customization for today's highly competitive global marketplace, many companies are utilizing product families and platform-based product development to increase variety, shorten lead times, and reduce costs. The key to a successful product family is the product platform from which it is derived either by adding, removing, or substituting one or more modules to the platform or by scaling the platform in one or more dimensions to target specific market niches. This nascent field of engineering design has matured rapidly in the past decade, and this paper provides a comprehensive review of the flurry of research activity that has occurred during that time to facilitate product family design and platform-based product development for mass customization. Techniques for identifying platform leveraging strategies within a product family are reviewed along with metrics for assessing the effectiveness of product platforms and product families. Special emphasis is placed on optimization approaches and artificial intelligence techniques to assist in the process of product family design and platform-based product development. Web-based systems for product platform customization are also discussed. Examples from both industry and academia are presented throughout the paper to highlight the benefits of product families and product platforms. The paper concludes with a discussion of potential areas of research to help bridge the gap between planning and managing families of products and designing and manufacturing them.

Platform-Based Design and Development: Current Trends and Needs in Industry

2006 ◽  
Author(s):  
Timothy W. Simpson ◽  
Tucker Marion ◽  
Olivier de Weck ◽  
Katja Ho¨ltta¨-Otto ◽  
Michael Kokkolaras ◽  
...  
Keyword(s):  
Product Development ◽  
Product Family ◽  
Cost Effective ◽  
Production Costs ◽  
Lead Times ◽  
Design Development ◽  
Platform Design ◽  
Product Families ◽  
Strategic Innovation ◽  
Future Work

Many companies constantly struggle to find cost-effective solutions to satisfy the diverse demands of their customers. In this paper, we report on two recent industry-focused conferences that emphasized platform design, development, and deployment as a means to increase variety, shorten lead-times, and reduce development and production costs. The first conference, Platform Management for Continued Growth, was held November–December 2004 in Atlanta, Georgia, and the second, 2005 Innovations in Product Development Conference — Product Families and Platforms: From Strategic Innovation to Implementation, was held in November 2005 in Cambridge, Massachusetts. The two conferences featured presentations from academia and more than 20 companies who shared their successes and frustrations with platform design and deployment, platform-based product development, and product family planning. Our intent is to provide a summary of the common themes that we observed in these two conferences. Based on this discussion, we extrapolate upon industry’s needs in platform design, development, and deployment to stimulate and catalyze future work in this important area of research.

Attribute Attribute-Based Clustering for Product Family Design

2007 ◽  
Author(s):  
Xiaoli Ye ◽  
John K. Gershenson
Keyword(s):  
Product Family ◽  
New Product ◽  
Design Tool ◽  
Product Family Design ◽  
Product Attributes ◽  
Product Families ◽  
Qualitative Design ◽  
Product Platforms ◽  
Target Values ◽  
The Ideal

As manufacturers are forced by today’s marketplace to provide nearly customized products to satisfy individual customer requirements and simultaneously achieve economies of scale during production, product family design and platform-based product development have garnered their attention. Determining which elements (attributes, functions, components, etc.) should be made common, variable, or unique, across a product family is the critical step in the successful implementation of product families and product platforms. Therefore, the inherent challenge in product family design is to balance the tradeoff between product commonality (how well the components and functions can be reused across a product family) and variety (the range of different products in a product family). There are opportunities to develop tools to directly aid in addressing the commonality/variety tradeoff at the product family planning stage in a way that supports the engineering design process. In this paper, we develop a matrix-based, qualitative design tool – the Attribute-Based Clustering Methodology (ABCM) that enables the design of product families to better satisfy the ideal commonality/variety tradeoff as determined by a company’s competitive focus. The ABCM is used to identify component commonality opportunities in product families without sacrificing product variety by analyzing product attributes across the product family. This paper focuses on the ABCM as used in new product family design and how the ABCM can be used to cluster product attributes into potential modules and product platforms. It is intended as a starting place, an opening set of questions, and as a framework for the general solution to the problem of a qualitative design tool for product family design that directly address the commonality/variety tradeoff. Development of the ABCM starts with the classification of existing product attributes into three categories: common, unique, and variable. The attributes are then clustered into platforms and differentiating modules based on their occurrences, target value ranges (partitioning the target values for each product attribute into achievable ranges), and the manner in which the range changes across the entire target market segments. The ABCM can be used as a qualitative guideline in product family design. In new product family design, it can be used to identify which elements (functions and components) should be clustered into a common platform and which should be clustered into differentiating modules based on an analysis of the product attributes, their occurrences, and their target values across the product family. In product family redesign, the ABCM can be used to identify any elements that are inappropriately included in a platform or inappropriately clustered into differentiating modules by comparing the ideal clustering with the actual clustering.

A Market-Based Design Strategy for a Universal Product Family

2012 ◽  
Vol 134 (11) ◽  
Author(s):  
Seung Ki Moon ◽  
Daniel A. McAdams
Keyword(s):  
Mass Customization ◽  
Universal Design ◽  
Product Family ◽  
Cost Effective ◽  
Differentiated Products ◽  
Product Family Design ◽  
Design Strategies ◽  
Market Segments ◽  
Light Duty

Companies that generate a variety of products and services are creating, and increasing research on, mass-customized products in order to satisfy customers’ specific needs. Currently, the majority of effort is focused on consumers who are without disabilities. The research presented here is motivated by the need to provide a basis of product design methods for users with some disability—often called universal design (UD). Product family design is a way to achieve cost-effective mass customization by allowing highly differentiated products serving distinct market segments to be developed from a common platform. By extending concepts from product family design and mass customization to universal design, we propose a method for developing and evaluating a universal product family within uncertain market environments. We will model design strategies for a universal product family as a market economy where product family platform configurations are generated through market segments based on a product platform and customers’ preferences. A coalitional game is employed to evaluate which design strategies provide more benefit when included in the platform based on the marginal profit contribution of each strategy. To demonstrate an implementation of the proposed method, we use a case study involving a family of light-duty trucks.

A Process Model and Data Mining to Support Designing Families of Services

2007 ◽  
Author(s):  
Seung Ki Moon ◽  
Timothy W. Simpson ◽  
Soundar R. T. Kumara
Keyword(s):  
Data Mining ◽  
Process Model ◽  
Process Analysis ◽  
Product Family ◽  
Cost Effective ◽  
Service Development ◽  
Product Family Design ◽  
New Service Development ◽  
Recent Trends

Product family design is a cost-effective way to achieve mass customization by allowing highly differentiated products to be developed from a common platform while targeting individual products to distinct market segments. Recent trends seek to apply and extend principles from product family design to new service development. In this paper, we extend concepts from platform-based product family design to create a novel methodology for module-based service family design. The new methodology helps identify a service platform along with variant and unique modules in a service family by integrating service-based process analysis, ontologies, and data mining. A function-process matrix and a service process model are investigated to define the relationships between the service functions and the service processes offered as part of a service. An ontology is used to represent the relationships between functional hierarchies in a service. Fuzzy clustering is employed to partition service processes into subsets for identifying modules in a given service family. The clustering result identifies the platform and its modules using a platform level membership function. We apply the proposed methodology to determine a new platform using a case study involving a family of banking services.

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