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SURENDRA PRAJAPAT
Department Of Mechnical Engineering
Jaipur Institute Of Engineering And Managment
Jaipur, Rajasthan
surendra1300pra@gmail.com
But the situation is gradually changing after the III. PROPOSED METHOD
Chinese government starts to encourage the
independent innovation rather than introducing The lack of effective method has limited the
existing technology. More and more Chinese application of controlling cost through design in
domestic automakers are involved in the new China. Therefore, this research proposes a method
product develop process, and even the joint- for automobile cost reduction during the design
ventures are observed to put more resources in the stage. Automobile in the Chinese market includes
design in China. However, the long period business vehicle and passenger vehicle, the latter
disregard has affected the research on the cost further comprise sedan, Multi-Purpose Vehicle
control during design stage. There is no effective (MPV) and Sport Utility Vehicle (SUV). To
tool to estimate the product cost and no method to simplify the study, the automobile in this study
implement the cost reduction while designing. focuses on the sedan only. The structure of the
method is shown in Figure 1.
Since the cost data are confidential, almost no
company is willing to share them with researchers
outside the company. The inaccessibility to the cost
information holds back the research on product cost
estimation and cost control. However, though
product cost data are unavailable, the retail prices,
which are the summation of costs, profits and so
on, can reveal some implications about them. By
introducing the Dephi method, the product cost
ratio of automobile can be estimated with a panel
of automotive market experts. Therefore, the
product cost can then be calculated backward from
the retail price. Then the specifications of
automobiles can be retrieved though the Internet.
These automobiles have design attribute with
Figure 1. The structure of proposed method
several possible values. For each of these values,
the mean value, standard deviation and probability A. Data Retrieval
distribution of the automobile costs are studied.
Then the designers can compare different designs The difficulty for automobile cost study exists in
to work out which design is better for cost control. the inaccessibility to the cost data directly since
After the design plan is fixed, the Tear Down they are confidential information. However, the
technique which is widely used by the Japanese cost can be estimated by analyzing the retail price
automakers is employed to reduce the product cost. which has a close relation with it. The data
concerning the automobile’s parameters and retail
II. REVIEW OF COST ESTIMATION AND prices are collected from a major Chinese
COST CONTROL METHOD automobile website–Cheshi (www.cheshi.com),
which has the complete, comprehensive, daily
Cost estimation approaches can be generally updated database. Therefore, it becomes the main
classified into two categories: qualitative data source in this study.
approaches and quantitative approaches [2].
Qualitative methods can accommodate various The cost studied in this paper is restricted in the
situations for its high flexibility [3]. Quantitative scope of product cost, which is defined as the cost
approaches need detailed design information and needed to manufacture an automobile. Thus,
not suitable for complicated products like marketing or sales cost is not taken into account.
automobile [4]. Therefore qualitative methods can For this reason, gross profit margin can not be used
better adapt to cost estimation at the automobile and the concept of product cost ratio is introduced
design stage. to correlate product cost with its retail price. The
product cost ratio is defined in following formula.
Target costing is the most widely used cost control Retail price = Product cost*(1+ Product cost ratio)
method for product design [5]. According to (1)
Moden [6], the two objects of target costing system
are: reducing the product cost during design while
B. Cost Estimation with Delphi Method
V. CONCLUSION