# Reducing the Total Product Cost at the Product Design Stage
## 2 Literature Review
### The Total Product Cost  
Each phase of the product life cycle generates the costs related to product management. The cost of new product development includes market research, labor cost regarding team members' salaries in the different phases of product development, material and energy used to manufacturing prototypes and product trial, their tests, as well as the cost of machine utilization, and external services, if any. Costs of production refer to job preparation, machine utilization, manufacturing, assembly, and quality assurance. The unit production cost includes costs related to material, labor, energy used in the production process, as well as overhead cost that can be assigned to a product. The sales and marketing costs contains advertising campaigns, shipping, and handling costs related to packing, carrying, and installation [25]. After-sales service is related to warranty costs, product remanufacturing, and product disposal, if any. Figure 2 illustrates cost values in a typical product life cycle. At the beginning, there is only the cost related to product development. After product launch, production and marketing cost occur that usually depends on the sales volume. There is also the after-sales cost that  
Figure 1: Product life cycle from a perspective of sustainable manufacturing (source: adapted from [21]). can occur during product usage or after removal of the product from the market. It is worth noting that production and after-sales cost are much larger than the development cost. The product designers are forced to obtain a trade-off between cost, product quality and functionality, and as a result, to develop a product by minimal cost and suitable customer satisfaction. This requires a proper cost product management in the phase of product design that is a techno-economic process [26]. Decisions in the design phase significantly affect product development and life cycle costs. Consequently, product design determines the majority of the manufacturing cost and product usage. There are many methods dedicated to cost estimation and optimization of the total product cost and customer satisfaction. Cost estimation methods can be divided into four groups [27]: intuitive, analogical, analytical, and parametric. Intuitive methods use past experience of an estimator. Analogical methods estimate the cost of new products using similarity to previous products. Analytical methods estimate the cost of a product by decomposing product development into elementary tasks with known cost. In turn, parametric methods estimate the cost of a new product from parameters that significantly influence the cost. This research is concerned with parametric cost methods. [PERSON] et al. [28] propose another classification of cost estimation methods that are categorized into analogy-based techniques, parametric models and engineering approaches. Analogy-based techniques are qualitative estimation methods based on an analysis of similarity between the new product and existing products. Parametric models include an analytical function of a set of variables which are usually related to some features of the new product (e.g., dimensions, materials used) and which are thought to have a significant impact on NPD project performance. Parametric estimation techniques may be based on regression analysis [29], artificial neural networks [10; 30], fuzzy logic systems [31; 32; 33], or hybrid systems such as neuro-fuzzy systems [5; 34] and genetic algorithms [35]. Engineering approaches are predicated on a detailed analysis of product features and the manufacturing process. For example, the cost of a new product is calculated in this approach as the sum of the resources used to design and produce each component of the product (e.g., raw materials, labor, equipment). As a result, the engineering approach is best used in the final phases of product development, in which the product and the manufacturing process are well defined [28]. [PERSON] et al.