Quality Function Deployment

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------------------------------------------------- operatıons management project report
Cost management through product design: target costing approach, Yasemin Zengin and Erhan Ada

In this paper, target costing tool combined with other management techniques, namely Quality Function Deployment (QFD) and Value Engineering (VE), has been focused with a case study. In this case study, QFD-TC (Target Costing) methodology has been executed in a SME (Small and medium enterprises) and it is showed that, integrating target costing with QFD and VE techniques is highly effective on managing the costs of product and overall production process.
Introduction / Motivation
In today’s world, customers demand increased functionality and quality with …show more content…

Using the target costing module, the cost of a hydrostatic testing unit was calculated as E1.799,26. With a mark-up of 20%, the unit selling price of the Company totalled up approximately E2.160,00, more than the price of the domestic producer.
Step 3: Target Costing
According to customer survey results, the selling price was calculated to be E1.803,75 per testing unit and it was decided to set a market price for testing unit that was 7.5%, but which included a 20% profit for the company.
Step 4: Cost breakdown on cost drivers and Step 5: target costing through product design.
After determining a target cost, according to customer feedbacks, company’s different teams work together to reduce cost to target cost. After considering QFD analysis and main cost drivers, the production team listed the following additional components illustrated in Table 1.

The optimal product was designed by keeping the balance of the survival tripod. In Table 2, the items and the costs of the new design are given. The new design of the product resulted in a total cost of E1.490,29 per unit.

Step 6: Continuous improvement.
Regardless of whether a target cost is achieved, efforts for continuous improvement should be provided to maintain the profitability and market position of the product.
Pros and cons in the implementation of QFD–TC process
* Company realised a considerable cost reduction for the

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