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Production Cost Drivers Analysis under DFMA Software and Solutions to Optimize Them

  • Cost Optimization is a persistent discipline to adjust expenses and reduce costs while maximizing business value, and it has proven to be one of the most influential strategies to generate profits and stay competitive in the market. In this study, technical and strategic solutions that can lead to manufacturing cost optimization were considered. For this purpose, a test environment was created according to the DFMA methodology using the DFMA Concurrent Costing V4.1 software developed by Boothroyd Dewhurst Inc. and the production expenses of a JED029M3 aluminum bushing product from WABCO Group were analyzed. Results revealed that these charges can be assigned to five main cost drivers Material, Machine Setup, Process, Scrap and Tools, of which Tooling was the most influential driver at lower volumes, while Material and Process remained two of the considerably substantial drivers across all ranges of volumes produced. Furthermore, among the optimization alternatives, the right choice for machine and raw material shape demonstrated to have a relative effects of less than 5% in reduction of manufacturing cost for 1,000 pieces, while outsourcing to China and transitioning toward economies of scale lowered could impact the total costs by -40% and -70%, respectively.

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Author:M. Fatho.
Advisor:Wolf-Dietrich Schneider
Document Type:Master's Thesis
Year of Completion:2023
Granting Institution:Hochschule Furtwangen
Date of final exam:2023/04/04
Release Date:2023/06/01
Tag:Cost drivers; Cost optimization; DFMA; Economy of scale; Outsourcing strategy
Degree Program:MBA - International Business Management
Functional area:Production, Operations and Supply Chain Management
Licence (German):License LogoUrheberrechtlich gesch├╝tzt