Cost Estimation in Engineer-to-Order Manufacturing

Abstract

In Engineer-to-Order (ETO) manufacturing the price of products must be defined during early stages of product design and during the bidding process, thus an overestimation of product development (PD) costs may lead to the loss of orders and an underestimation causes a profit loss. What many ETO systems have in common is that the products have to be developed based on different customer requirements so that each order usually results in a new variant. Furthermore, many customer requirement change-requests may arise in different phases of the PD, which is to be considered properly. Thus it is utmost important for ETO systems to have an accurate cost estimation in first stages of the product design and to be able to determine the cost of customer requirement changes in different phases of PD. This paper aims to present a cost estimation methodology as well as a cost estimation model, which estimate the cost of products by relative comparison of the attributes of new product variants with the attributes of standard product variants. In addition, as a necessity in ETO manufacturing, the cost calculation of customer requirement changes in different phases of PD is integrated in the presented method.