Estimating cost savings when implementing a product platform approach
Many market forces are driving companies to improve their targeting of increasingly small market niches. To accomplish this efficiently, products are organized into product families that typically share common platforms. To reorganize the current product offerings or new products into a product family, using a platform approach, requires estimating the savings for such a modification. One of the problems encountered in estimating development and design cost is the lack of availability of hard information during the initial design phases. The purpose of this paper is to estimate the design and development cost, when moving towards a platform approach, using simple models. The activity based product family cost models are developed from existing single product design activities, which are modified and extended to reflect activities related to development of product platform and subsequent product family members supported by the platform. Uncertainty related to cost associated with activities are included in the model, which is solved using Monte Carlo simulation. The approach is demonstrated using a hard disk drive spindle motor platform development for a family of hard disks.
product family design cost estimation activity based costing