Activity-Based Costing Model for MGPD

Abstract

Many product development processes are multi-generational in nature and may require redesign of the product at each generation. This is due to the fact that an optimized product development strategy for a single generation may not be the best option for multi-generation scenarios. To provide measurements for deployment of multi-generational product development (MGPD), an integrated project cost model has been introduced in this paper. This model posits that integrated product development cost consists of three factors, namely: product development cost, service cost and associated risks costs. Further, the risks cost includes three main factors: technical risk, market risk and operation risk. This specialized product development framework addresses the basic needs of MGPD, such as design for future reuse and design for modularity, and also serves as a decision tool for project management. For the purpose of validating the proposed model, an empirical case study is illustrated by considering three candidate concepts. Therefore, the proposed strategic cost model measures the on-going MGPD status, as well as provides a cost tools to support the management decision-making.