A New Approach for Assessing Function-cost Correlation in Product Value Analysis

Abstract

The paper presents a new approach for product value analysis by combining a classical approach with a straightforward (intuitive) one and incorporating a new method of calculating (setting up) a statistical confidence interval in terms of functionality and cost. In this process, the value analysis team can observe the differences between the ideal and real function to cost ratio and easily set up a confidence interval avoiding negative effects on the overall product quality. Moreover, computing an “close to optimal state” for the function-cost ratio, results in a better understanding of the differences, thus aiding the process of generating solutions for adjusting the ratio in case of cost reduction or reallocation, integrating a new function, product reengineering or modernization.