Manufacturing Cost Modeling for Product Design


The process of product design is driven toward achieving design specifications while meeting cost targets. Designers typically have models and tools to aid in functional and performance analysis of the design but few tools and little quantitative information to aid in cost analysis. Estimates of the cost of manufacture often are made through a cost multiplier based on material cost. Manufacturing supplies guidelines to aid in design, but these guidelines often lack the detail needed to make sound design decisions.

A need was identified for a quantitative way for modeling manufacturing costs at Motorola. After benchmarking cost modeling efforts around the company, an activity-based costing method was developed to model manufacturing cycle time and cost. Models for 12 key manufacturing steps were developed. The factory operating costs are broken down by time, and cost is allocated to each product according to the processing it requires. The process models were combined into a system-level model, capturing subtle yet realistic operational detail.