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Qualitative Techniques
Published in Ron Basu, The Green Six Sigma Handbook, 2023
The following is some standard terminology used in ABC: Activities: Activities are the types of work done and which consume resources in an organisation.Cost Pool: A cost pool is the total amount of costs which may be derived from different departments, associated with an activity.Cost Driver: A cost driver is an item that triggers an activity. Costs are assigned according to the number of occurrences associated with a cost driver. The cost drivers are used to derive the cost of activities to cost pools. There is one cost driver for each cost pool.
Product prototyping
Published in Fuewen Frank Liou, Rapid Prototyping and Engineering Applications, 2019
Cost estimation is the process of determining cost behavior of a particular cost item, and cost behavior is the relationship between cost and activity (often cost driver). Cost prediction uses cost behavior knowledge to forecast future costs at a particular level of activity. A cost driver is any activity or factor that causes costs to be incurred. Volume-based cost drivers assume all costs are driven, or caused, by the volume of production (or sales), whereas non-volume-based cost drivers are costs that are not directly related to production volume. Activity-based costing classifies costs into four categories: (1) unit-level activities performed for each unit; (2) batch-level activities performed for a group of product units, such as batch or a delivery load; (3) product-level activities performed for specific products or product families; and (4) facility-level costs incurred to support the whole business. Cost drivers can be identified at various levels. Cost-estimate accuracy increases with increased cost categories, but so does cost. To select the appropriate cost drivers, the input or output measure is critical. There should be a strong correlation between cost and cost driver, and cost driver must be easy to measure. One also needs to consider a long-term or a short-term perspective.
Polymer Solar Cells An Energy Source for Low-Power Consumption Electronics
Published in Madhu Bhaskaran, Sharath Sriram, Krzysztof Iniewski, Energy Harvesting with Functional Materials and Microsystems, 2017
Badr Omrane, Sasan V. Grayli, Vivien Lo, Clint Landrock, Siamack V. Grayli, Jeydmer Aristizabal, Yindar Chuo, Bozena Kaminska
In all three manufacturing processes, it is evident that the cost of raw materials is the largest cost driver among all cost components. In the batch production process, cost of raw materials represents 75% of total production cost at small production volumes (i.e., 3 MW) annually. As production volume increases to 30 MW and then 300 MW annually, cost of raw materials reduces to only 49% with the batch process. In the semicontinuous process, cost of raw materials ranges from 94% in smaller production volumes to 71% in larger production volumes. Finally, in the continuous process, cost of raw materials ranges from 68% to 97% of total production cost, depending on the level of production. Direct labor cost represents a distant second important factor in determining manufacturing cost.
Design for test and qualification through activity-based modelling in product architecture design
Published in Journal of Engineering Design, 2021
Olivia Borgue, Christopher Paissoni, Massimo Panarotto, Ola Isaksson, Tommaso Andreussi, Nicole Viola
The notion of a driver is used in literature to describe the causes that affect the output of a system. The term – in this case, cost driver – is usually implemented when referring to factors that cause a change in cost (Shank 1989). Authors such as Ben-Arieh and Qian (2003), for instance, developed a parametric cost-estimation model for modelling costs of manufacturing activities using cost drivers of machined parts; the authors identified activity cost drivers (ACD) for the manufacturing processes. For each ACD, they defined activity cost driver rates (ACDR) as the total activity cost divided by the number of cost drivers. Their cost model allows for modelling the costs of manufacturing activities in the early design and development phases.