Posted by Estimation of Non Recurring Costs in Manufacturing
Methods & Models Track
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Abstract:
This research aims to improve estimation of the non recurring costs (NRCs) of manufacture. Investment required prior to the first unit of production varies depending on the industry. However shorter production runs mean that manufacturing investment levels are increasingly relevant. The larger body of cost estimation research is focused on modelling product unit cost. Much cost estimation practice is informed by experience and understanding of costing relationships. The less frequent development of new manufacturing capacity limits options for research and the development of bodies of expert knowledge in the estimation of NRCs. In the early stages of a project, when accurate estimation of total investment is required, there are few reliable predictive indicators for total NRCs. Yet the importance of NRCs remains that they can significantly impact product unit cost. Unit cost being defined as recurring plus non recurring costs divided by production numbers. When NRC’s are at an inappropriately high level compared to the number of products sold, the total recovery of investment, or the breakeven point, can occur damagingly late in a production run. With aerospace production runs often spread over many decades this late breakeven period equates to a “cash-burning” project over an extended period.
The aim of this research is to develop additional competence to estimate NRCs through increased understanding about NRC cost estimating relationships. In this research the estimating practice of aerospace engineers, facing novel build philosophies, has been captured through cause and effect analysis and decision trees, in order to investigate NRC cost structures and drivers of total NRC levels. Concurrent engineering has generated a variety of cost estimating models with the most sophisticated being developed around large volumes of product data. This research will also help develop NRC cost modelling in order to provide a basis for validation of NRC cost assumptions for current product cost models.
Author(s):
Ronald Bradbery
Currently IdMRC researcher at the University of Bath investigating issues encountered in estimation the cost of acquiring new manufacturing capacity Experience as a SME general manager and as a financial controller in a national FMCGs business. Specific areas of interest: financial visualisation, cost estimation especially non recurring, development tradeoffs in business optimisation, use of learning and forgetting curves, military acquisitions. Holds degrees in information technology, knowledge management and air transport management and is a qualified management accountant.
Linda Newnes
Dr. Linda Newnes is currently Senior Lecturer in the seven million pound Innovative design and Manufacturing Research Centre [IdMRC] of the Department of Mechanical Engineering at the University of Bath. She is also an investigator on the multi-million pound Innovative electronics Manufacturing Research centre (IeMRC). Working within both of these centres her core research activity is in the area of cost modelling/estimation, where she leads the costing teams. Her research focuses on Through Life Costing, from concept design through to in-service/disposal. She has published over 70-refereed papers and is on the editorial board of the IJCIM. She is also on conference scientific committees. Her work is carried out extensively with industry and in particular she has had a fruitful collaboration with the aerospace/defence industry over many years. Typical projects have included on-line cost estimating in parallel with the concept design, through life costing for low volume long life defence products. Their research also involves working with SMEs on knowledge transfer for cost estimating
Antony Mileham
Antony R Mileham undertakes research in the IdMRC in the general area of Manufacturing with particular reference to the modelling of manufacturing processes and systems. Specific areas of interest include: Manufacturing Process Modelling, Rapid Manufacturing Processes (Incremental Sheet Forming, Cryogenic Machining), CAPP, Cost Prediction, Manufacturing Systems Design (Flexible Assembly systems), Manufacturing System Simulation, Rapid Changeovers, Reverse Engineering and Large Volume Metrology. He has published 1 book, over 137 papers in journals and International Conferences, is editor of the IMechE Journal of Short Communications in Design and Manufacture, book review editor of the IMechE Journal of Engineering Manufacture and on the editorial board of the International Journal of Computer Integrated Manufacturing Systems. He was awarded a Ford Motor Co Ltd fellowship in 1991 and is an Erskine fellow at the University of Canterbury, New Zealand.