A sequential block approach to the design of a cost estimation system

Abstract

The estimation of costs is a vital concern of every manufacturing firm. Many economic and financial decisions are arrived at using some form of cost estimation. To assist in the estimation process, companies have produced computer software specifically designed for cost estimation. A common characteritic of many cost estimating software are their narrowly focused estimation capabilities. This refers to the software being designed to estimate costs for specific process or a specific set of processes. Since different companies estimate costs using different inputs and estimation techniques. flexibility in a cost estimation software design is essential. However, if a cost estimation syste is not designed properly too much flexibility can reduce the effectiveness of the system. This paper discusses a sequential block approach to the design of a computerized cost estimation system. The system constructs cost estimates by defining each step of the production as a block for a specific product. Then the sequence of blocks are linked as a tree structure to represent the whole production processes. The design of the syste is illustrated using the estimation of the manufacturing cost of a typical plate/fin type automotive evaporator.