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Study on Selection and Optimization of Life
Cycle Warranty Cost Driver Based on Value
Engineering
YANG Hong-xiong1.2
1.School of Management, Tianjin
University
Tianjin 300072, China
E-mail: [email protected]
LIU Yi-liu1
1.School of Management, Tianjin
University
Tianjin 300072, China
[email protected]
SUN Chun-ling2
2.School of ManagementTianjin
University of Technology
Tianjin 300384, China
E-mail: [email protected]
AbstractBasing on research background and status
quo of cost drivers selection and optimization theorythemodel of
warranty cost driver selection which include
design phase warranty cost driverproduction phase
warranty cost driver after-sale service stage warranty cost
driver is building in the paper with Value Engineering
theory. The paper also expatiates on judgmental methods
aiming at computing results and optimization methods of
warranty cost drivers in different stages. The model
releases
from selecting pattern of warranty cost drivers rely on
complex calculations and simple empirical judgment. The
scientific practical warranty cost drivers management means
are introduced, and they are more suitable to enterprises
actual operation.
KeywordsValue Engineering; life cycle; warrantycost driver;
selectionoptimization
INTRODUCTION
Its early for foreign experts to have a research on cost
drivers selection and optimization theory. In 1997,
Schniederjans & Garvin[1] researched into cost drivers
selection by using Multiobjective Programming; in 2001,Pro.
Carseten Homburg
[2]created a model for allocating
eliminated cost driver by using cost driver combination. 5
years later, OuYang Liyun and Zhao Jianmei[3]
supplemented some work in the previous model of Pro.
Carseten Homburg by using statistics, which made
correlation analysis and hypothesis test in cost driver. At
the
same year, according to compare and analyze the combined
substitution model which is constructed by Carseten
Humburg for selecting numbers of cost drivers, Zhao
Huifang, Xu Jun and Zhang Xuan[4] proposed to decide
weight assignment of the model by using regression
analysis, and to reduce the number of cost drivers to
simplify the activity cost system and improve the
modelspractical operability by combining the cost driver.
In addition, Wu Haowen, Wang Yiping[5]
, Du Xiaoxu[6]
had a qualitative discussion on selecting cost drive, Cen
Bin[7]
, Liang Cangyong, Chen Jianbin[8]
, Deng Houping>@
selected cost driver by using Multi-objective 0-1
programming, 0-1 Fuzzy Objective Programming, Analytic
Hierarchy Process (AHP) and other methods; Babad &
Balachandran[10],Wang Xinping,etc[11] Xu Ling[12], Li
Buxi[13,14], Yu Zhe[15] took methods of Linear Regression
Analysis and Partial Correlation Analysis into cost driver
selection model, they improved the judgment accuracy;
Fang Jun, Chang Hua, Huang Kan[16]
had a research on
selecting and combining the cost driver. All processes of
these methods for selecting and combining cost driver is
complicated, so its hard for mostly managers to grasp.
SELECTION MODEL OF PRODUCT WARRANTY
COST DRIVER BASE ON VALUE ENGINEERING
The meris of selection and optimization of warranty
cost driver bases on value engineering are showed
following:calculating substance cost is non-sense when the
products
structure changed, the original parts could be canceled or
transformed thoroughly; but no matter how alterative the
product structure is, product warranty of customers needs is
always there, so it can take a comparison of warranty cost
driver between new and old products or improved and
non-improved products.
A. The Definition of Every Phase Warranty Cost Driver
Function in Life Cycle
The definition of design phase warranty cost driver
function: elements of impacting product warranty function
Sponsored by the National Nature Fund 70671071
978-1-4244- 7618-3 /10/$26.00 2010 IEEE
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in design phase, such as product function, customers need
in price, enterprise ability in resource.
The definition of production phase warranty cost
driver function: in order to avoid disorder in function,
some
product warranty inputs of time, resource, and energy are
prepared in process of production.
The definition of after-sale service phase warranty cost
driver function: products in guarantee period, in order to
ensure normal use of customers, artificial maintenance cost
(service time, service number), materials cost should be
input, and cost of building, using and maintaining warranty
service facilities, logistic supply, personnel training and
other management payments.
B. The Arrangement of Warranty Cost Driver
According to those definitions mentioned above, the
function system drawing is arranged as figure1:
FIGURE1 THE FUNCTION SYSTEM DRAWING OF WARRANTY COST DRIVER
C. Assessment of Warranty Cost Driver Function
At first, confirming standards of warranty cost driver
function, obtaining function important factor. Collecting
and
arranging facilities design drawing, records and summary,
according to system structure, performance data and
operating requirement in some certain product functions,
confirming functional standards of warranty cost driver
system and its subsystem; building state feature space for
describing system cost driver; comprehensive analyzing
function weight of every cost driver, both big and small
plans for maintaining facilities, and facilities and parts
for
Synchronous maintaining in system, depending on every
technical states and failure diagnosis to confirm function
important factor corresponding to product warranty cost
driver. The process is as follow:
The first step, putting every score in table together, so
warranty
cost
driver
function
design phase warranty
cost driver function f1
after-sale
service
phase
warranty
cost driver
function f3
production phasewarranty cost driver
function f2
design cost driver function of product function warranty f11
design cost driver function of customers need in price f12
design cost driver function of enterprise ability in resource
f13
warranty cost driver function consumption of time f21
warranty cost driver function consumption of resource f22
warranty cost driver function consumption of energy f23
maintenance cost driver function of numbers f311
maintenance cost driver function of resource f312
maintenance cost driver function of time f313
maintenance
cost driver
function f31
managementc
ost driver
function f32
payment driver function of building warranty service
facilities f321
payment driver function of using and maintaining
warranty service facilities f322
payment driver function of logistic supply f323
payment driver function of personnel training f324
payment driver function of other management
payments f325
economic cost driver function f33
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to show corresponding functions result.
31 21 2 3
1 2 3 1 2 3 1 2 3
1311 1211 12 13
11 12 13 11 12 13 11 12 13
2321 2221 22 23
21 22 23 21 22 23 21 22 23
31 32 3331 32 33
31 32 33 31 32 33 3
, ,
, ,
, ,
, ,
ff ff f f
f f f f f f f f f
ff ff f f
f f f f f f f f f
ff ff f f
f f f f f f f f f
f f ff f f
f f f f f f f
1 32 33
311 312 313311 312 313
311 312 313 311 312 313 311 312 313
321 322321 322
321 322 323 324 325 321 322 323 324 325
323 324323 324
321 322 323 324 325 321 322
, ,
,
,
f f
f f ff f f
f f f f f f f f f
f ff f
f f f f f f f f f f
f ff f
f f f f f f f
323 324 325
325325
321 322 323 324 325
f f f
ff
f f f f f
calculating corresponding functions final score. Theformula is
as follow:
11 1 11 12 1 12 13 1 13
21 2 21 22 2 22 23 2 23
31 3 31 32 3 32 33 3 33
311 3 31 311 312 3 31 312
313 3 31 313
321 3 32 321 322 3 32 322
3
, ,
, ,
, ,
,
,
f f f f f f f f f
f f f f f f f f f
f f f f f f f f f
f f f f f f f f
f f f f
f f f f f f f f
f
cc c u u u
c c c u u u
c c c u u u
c c c c u u u u
c c u u
c c c c u u u u
c23 3 32 323 324 3 32 324
325 3 32 325
,f f f f f f f
f f f f
c c c u u u u
c c u u
The benefit of this way of assigning score and
calculating is to equal every function final score to its
function important factor (the weight of score), no need
calculating any more.
Secondly, confirming constraint states according to
states of design, production, major or minor repairs,
solving
every drivers value of actual cost corresponding to
productwarranty function. The product function warranty of
every
phase needs a certain support of cost, that is some inputs
of
manpower and material resources in certain techniques, its
equal to every drivers value of actual cost, its easy to get
by measuring in one enterprise.
Finally, using i ii
ii
i
F fV
cCc
c
, that is the ratio of
the function important factor of product warranty cost
driver
and the cost coefficient, solving the cost coefficient of
cost
driver, confirming to consider optimal cost driver firstly,
and making a support to improve the next cycle production.
In the formal, Vi the value coefficient of cost
driver for the number of I;Fithe function important
factor of cost driver for the number of I;Cithe cost
coefficient of cost driver for the number of i
Vi1, there maybe three reasons:1, the cost is a little
low at present, so that the function which it should have is
not achieved, so it should be put into the scope ofoptimizing
cost driver, and to consider how to strengthen
cost driver;2, the function supported by cost driver at
present exceeds the function level which it should have, it
exists excess functions, it also should be put into the
scope
of optimizing cost driver, and to consider how to remove
excess functions;3, there are some particularities in
technology and economy for evaluation objects, in the
premise of achieving the function, the cost is a little low,
so
it should not be put into the scope of optimizing cost
driver.
Vi=it means that the actual cost of warranty cost
driver matches its function, in this state the cost driver
is
considered to be ideal.
Basing on the logic causality, the mapping and the
specificity between product function warranty system and
warranty cost driver, and the predictability for warranty
cost,
then according to some methods, the lowest cost
corresponding to every cost driver function can be solved,
the deviation from cost C0; or making the function
score be comparative accurate, the deviation from score fi0,
base point is not needed.
OPTIMIZATION OF LIFE CYCLE WARRANTY
COST DRIVER BASED ON VALUE ENGINEERING
Optimization of design phase warranty cost driver:
basing on the score of Vi to select the object in this
phase,
according to using failure mode and effects analysis
(FMEA), to confirm the parts name, the failure mode and
the failure reason of causing the function failure, then to
improve the design, avoid the failure and alleviate the
consequence or to help to find the way of detecting
failures.
Optimization of production phase warranty cost driver:
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basing on the score of Vi to select the object in this
phase,
according to analyzing the impact of every units cost driver
in product function of production phase, to propose some
advisable preventive and improvement measures in different
states, so improving the facilitys reliability. State
function
analysis are showed in table1.
TABLE 1 STATE FUNCTIONANALYSIS OF PRODUCT AND CORRESPONDING COST
DRIVER
State property better state good state general state failure
statefunction state Function well Function drop function drop much
all function lose
Cost driver
state
Facility function
and cost are
matching better
Facility function and
cost are matching well
Function and cost are
matching general cost
drivers enter supervising
function and cost are
matching badlycost driver
enter optimizing and control
Optimization of after-sale maintenance phase warranty
cost driver: basing on the score of Vi to select the object
in
this phase, according to using FMEA to structure all failure
modes of after-sale maintenance phase cost driver, to
confirm their higher influences on product function, this is
a
strengthening comprehensive analysis in analyzing warranty
cost driver. What to illustrate is that its not the same
with
the consequence of FMEA in design phase, the consequence
of FMEA in after-sale maintenance phase should take cost
driver analysis on the major failure according to actual
after-sale maintenance, and to make the optimization of cost
driver well targeted. In this phase, the first thing should
be
considered are what kinds of cost driver corresponding to
failure modes are more emerging in actual condition. The
failure mode driver which has a higher emergence and
obvious influence should be put into the preferred position
of analysis; the failure mode driver which has a lower
emergence should be put after the failure mode driver which
has a higher emergence (exception of failure mode driver
which has more serious consequence).
CONCLUSIONS
The selection and optimization model of cost driver
based on value engineering takes a break in selecting cost
driver that relies on complex calculate or simple experience
judgment, it draws warranty cost driver management which
is scientific, practical and more actual for operating into
the
model, and makes improvements of convenience and
efficacy for decision.
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