Chapter 2, Problem 28P

To determine

Whether figures are important effect for companies

Agreement The purpose of a life-cycle cost is one that goes through the entire process from start to finish. The graph below shows different stages in product life cycle.

As one can see, there are a number of stages that a product has to go through in order for a cost to qualify as a product life cycle cost. The concepts of age and life cycle apply to products in much the same way as a product life cycle cost. The concepts of age and life cycle apply to products in much the same way as they apply to humans. A product begins as an infant with an idea, grows up and builds momentum over time, matures, and then deteriorates before sadly passing away.

Refer to the figure. The first graphic is the cumulative life cycle of dollars spent on a good, product or a service. On a closer look, it resembles to a partridge. As the product goes through the processes, the amount of money committed is much higher than the costs that are spent for the product. However, as it nears the retirement or declining time of the product, both the costs committed as well as spent are nearly equal before they are fully exhausted.

There are several takeaways that one get from the graph. First, then costs that are committed to the product are much higher than those in the latter phases. The second takeaway is that the companies that are developing the goods, products, or services want to maximize the value per dollar spent on the product as early as possible. Thus, the benefits are also not realized until the product is produced in some quantity. Even then, it usually take s extra time for the benefits to be realized.

The second figure focuses on the ease of making changes to the product, good, or service. Here, as the product passes through different phases, the cost to implement changes increases to the point where it equals to the cost. The production phase is the optimal time to make changes because the adjustment costs are roughly half the cost of the product.

The flip side of the graphic is the ease to change the product. It is much more difficult to change the product in the earlier phases because there are many unknown consequences that could arise due to changes implemented. However, as the time goes on, the ease to make changes increases as well. Once the product is retired, changes can then be made prior to the creation of a new product replacement.

Conclusion:

In short, there are certain takeaways from this comparative analysis of the two different graphics. The first is the intention to show that changes made earlier are less expensive to implement. The second takeaway is that the quality of the product, goods, and services will be better when these are made sooner in the process. Finally, integrated, cross-functional, and enterprise-wide approaches to the product design and execution will be better for companies at present, than rash major changes throughout the design process.