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LIFE CYCLE COSTING

DEFINITION
Process of collecting, interpreting
and analysing data and applying
quantitative tools and techniques to
predict the future resources that will
be required.
Technique to establish the total cost
of ownership
Assist mgt in decision making

PRODUCT LIFE CYCLE COST


Product planning
Product design
Production
Distribution and customer support
*commitment cost and incurred
cost

BENEFITS OF LCC
Option evaluation evaluation of
competing proposals
Improved awareness provides mgt
with an improved awareness of the
factors that drive cost and the
resources required
Improved forecasting estimate
more accurate

DISADVANTAGE OF LCC
Technology always change, current
technology may not relevant in the
future
Difficult in estimation of cost
(commitment cost and incurred cost)

CONCLUSION
It is an instruments for the
assessment and reduction of cost in
product development
Provide tools for the mgt maintain
budgets, ownership costs and
present decision making scenarios in
a financial perspective to achieve the
lowest long term cost of ownership