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Calculation of Complexity Costs - An Approach for Rationalizing a Product Program

Calculation of Complexity Costs - An Approach for Rationalizing a Product Program

Year: 2012

Editor: Assoc. Prof. Poul Kyvsgaard Hansen, Professor John Rasmussen, Assoc. Prof. Kaj A. Jřrgensen, Assoc. Prof. Christian Tollestrup

Author: Christian Lindschou Hansen, Niels Henrik Mortensen, Lars Hvam and Ulf Harlou

Series: NordDESIGN

Institution: 1: Aalborg University, Denmark; 2: Design Society, United Kingdom

ISBN: 978-87-91831-51-5

Abstract

This paper proposes an operational method for rationalizing a product program based on the calculation of complexity costs. The method takes its starting point in the calculation of complexity costs on a product program level. This is done throughout the value chain ranging from component inventories at the factory sites, all the way to the distribution of finished goods from distribution centers to the customers. The method proposes a step-wise approach including the analysis, quantification and allocation of product program complexity costs by the means of identifying of a number of suggested Life Cycle Complexity Factors (LCCFs). The suggested method has been tested in an action based research study with promising results. The case study shows how the allocation of complexity costs on individual product variants provides previously unknown insights into the true cost structure of a product program. These findings represent an improved decision basis for the planning of reactive and proactive initiatives of rationalizing a product program.

Keywords: Complexity costs; product program; rationalization; product architecture

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ds conferenceNordDesign 2012

This 9th bi-annual conference serves as a Nordic complement to the large European and American conferences within the field of Engineering Design and Product Development. The conference topic is design in a wide context: Integrated Product Development, Engineering Design, Industrial Design and Conceptualisation. Suggested topics for paper submission are: - Product Development - Research approaches and topics - Design education and teaching Researchers, practitioners and students are invited...

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Special Interest Group (SIG)NordDesign

Enhancing a Nordic approach to product development in industry, education and research...

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SIG Workshop - March 2013