Abstract
In this paper, we propose the estimation and reduction methods for manufacturing costs based on a proposed work structure diagram. Firstly, we construct a work structure diagram in which activities corresponding to transportation during processes, operation/assembly, inventory, and logistics both domestically and in foreign countries are added to the structure diagram in MRP. Secondly, we propose an estimation method for manufacturing costs based on the work structure diagram. In the breakdown method, manufacturing costs are calculated from top to bottom in the work structure diagram, and in the bottom-up method, cost is calculated from bottom to top. Manufacturing costs are estimated based on not only cost factors but also fixed and variable costs. Thirdly, we propose a reduction method for manufacturing costs in the breakdown method, bottom-up method and imported method based on unit selection criteria (maximum cost, mean cost, fixed and variable costs) and foreign manufacturing criteria (inferior rate of unit and exchange rate). In the breakdown and bottom-up methods, variable or fixed costs are reduced to attain profits under the condition that the variable cost rate of a process is given and the break-even cost is calculated to the given variable cost rate. In the imported method, parts/units are imported from a foreign country where the import costs are minimal.
