System Cost Modeling: Estimating Manufacturing Cost in Large Complex Systems+

This paper proposes a methodology, Systems Cost Modeling (SCM), to evaluate the cost of complex systems with a large number of individual components and subsystems. Simple characteristics associated with each component are used as inputs to parametric estimates of fixed and variable costs, as well as process use time of relevant resources. These estimates are then used to calculate individual component costs, which are then aggregated to the relevant system level. SCM focuses, not on obtaining accurate evaluations of component manufacturing cost, but rather on providing reliable calculations of the overall system cost and enable a robust analysis of the influence of key external parameters such as volume or factor input costs on total cost behavior. To show the use and validity of the SCM, an application of the methodology to the calculation of the supply chain costs for a set of stamped parts is presented.