Technical cost modeling

For example, TCM can be used to determine the plastic process that is best for production without extensive expenditures of capital and time. Not only can TCM be used to establish direct comparisons between processes, but it can also determine the ultimate performance of a particular process, as well as identifying the limiting process steps and parameters. 

TCM uses an approach to cost estimating in which each of the elements that contribute to the total cost is estimated individually. These individual estimates are derived from basic principles and the manufacturing process. This reduces the complex problem of cost analysis to a series of simpler estimating problems and brings processing expertise rather than intuition to bear on solving these problems. 

In dividing cost into its contributing elements the first distinction to be made is that some cost elements depend upon the number of products produced annually, whereas others do not. For example, the cost contribution of the plastic is the same regardless of the number of items produced, unless the 

Basically the variable cost elements are those elements of piece cost whose values are dependent on the number of pieces produced. For most plastics fabrication processes the principal variable cost elements are the material, direct labor, and energy costs. 

Fixed costs are those elements of piece cost that are a function of the annual production volume. Fixed costs are called fixed because they typically represent one-time capital investments (buildings, silos, processing machines, etc.) or annual expenses unaffected by the number of products produced (building rent, engineering support, administrative personnel, etc.). Typically, these costs are distributed over the total number of products produced in a given period. For plastics processes the principal elements are main machine cost, auxiliary equipment cost, tooling cost, building cost, overhead labor cost, maintenance cost, and the cost of capital. 

In dividing cost into its contributing elements the first distinction to be made is that some cost elements depend upon the number of products produced annually, whereas others do not. For example, the cost contribution of the plastic is the same regardless of the number of items produced, unless the material price is discounted because of high volume. On the other hand, the per-piece cost of tooling will vaiy with changes in production volume. These two types of cost elements, which are called the variable and fixed costs, respectively, create a natural division of the elements of manufacturing part cost. 

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Fig. 11-12. Cost comparison of panel production using a technical cost modeling program, showing blow molding with the lowest piece cost.

Schubel PJ. Technical cost modelling for a generic 45-m wind turbine blade produced by vacuum infusion (VI). Renewable Energy, 2010 35(1) 183-189. DOI 10.1016/j.renene.2009.02.030. 

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