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1.3 Linking the Production Cost to the Product Design

It is sound accounting practice to tie the cost of every aspect of production to the cost to be charged to the customer. Unfortunately, the practice today is such that the price of the products are determined by some kind of average based on the part weight plus geometry and not on the actual design and production costs. Furthermore, this idea is also perpetuated by researchers who do not have any design factor [#!price:costEstimate!#]. Here it is advocated to price according to the actual design and production costs. It is believed that better pricing results from such a practice. In today's practice, even after the project is finished, no one calculates the actual cost of production, let alone calculating the actual profits. The consequences of such a practice are clear: it results in no push for better design, and with no idea which jobs make profits and which do not. Furthermore, considerable financial cost is incurred which could easily be eliminated. Several chapters in this book are dedicated to linking the design to the cost (end-price).


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Next: 1.4 Historical Background Up: 1. Introduction Previous: 1.2 Designed/Undesigned Scrap/Cost   Contents
Genick Bar-Meir ||| www.potto.org
copyright Dec , 2006

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