, 59:21 | Cite as

Process cost modeling: Strategic engineering and economic evaluation of materials technologies

Professional Affairs Feature


Production cost is a vital performance metric for engineering and management analysis. Despite its obvious relevance throughout the product development cycle, cost analysis has not been a focus of the design engineer. In part, this is because of some key misunderstandings of what cost is-engineers have not been trained in the techniques that tie manufacturing cost to the technical and design parameters with which they are more comfortable and familiar. While there have been many calls for a closer relationship between engineering and economic analysis, these key conceptual obstacles, in conjunction with the limits of the computational tools available, have limited the integration of cost analysis into product and process development. This paper summarizes the conceptual limitations that need to be overcome and presents a basis for revising the notion of process cost analysis. Moreover, it presents a series of cost analysis cases that demonstrate the way in which the notion of “context” lies at the heart of effective use of engineering cost estimates.


  1. 1.
    John Victor Busch and Frank Remsen Field III, “Technical Cost Modeling,” Blow Molding Handbook, ed. Donald V. Rosato and Dominick Rosato (New York: Hanser Publishers,1989), pp. 839–871.Google Scholar
  2. 2.
    Donald E. Garrett, Chemical Engineering Economics (New York: Van Nostrand Reinhold, 1989).Google Scholar
  3. 3.
    Randolph Kirchain and Frank Field III, “Process Based Cost Modeling: Understanding the Economics of Technical Decisions,” Encyclopedia of Materials: Science and Technology, ed. K.H. Jürgen Buschow et al. (Dordrecht: Elsevier, 2001), pp. 1718–1727.Google Scholar
  4. 4.
    Jaegwon Kim, “Making Sense of Emergence,” Philosophical Studies, 95(1–2) (August 1999), pp. 3–36.CrossRefGoogle Scholar
  5. 5.
    Materials Science and Engineering for the 1990s (Washington, DC: National Academy Press, 1989); Scholar
  6. 6.
    Hollis B. Chenery, “Engineering Production Functions,” The Quarterly Journal of Economics, 63(4) (1949), pp. 507–531.CrossRefGoogle Scholar
  7. 7.
    Soren Wibe, “Engineering Production Functions: A Survey,” Economica, 51(204) (1984), pp. 401–411.CrossRefGoogle Scholar
  8. 8.
    V. Kerry Smith, “Another View of the State of Engineering Production Functions,” Economica, 53(212) (1986), pp. 529–532.Google Scholar
  9. 9.
    Anne P. Grosse, “The Technological Structure of the Cotton Textile Industry,” Studies in the Structure of the American Economy: Theoretical and Empirical Exploration in Input-Output Analysis, ed. Wassily Leontief (New York: Oxford University Press, 1953), pp. 360–420.Google Scholar
  10. 10.
    Allen R. Ferguson, “Commercial Air Transportation in the United States,” Studies in the Structure of the American Economy: Theoretical and Empirical Exploration in Input-Output Analysis, ed. Wassily Leontief (New York: Oxford University Press, 1953), pp. 421–447.Google Scholar
  11. 11.
    Frank C. Vilbrandt, Chemical Engineering Plant Design (New York: McGraw-Hill Book Company, 1942).Google Scholar
  12. 12.
    Cecil H. Chilton, editor, Cost Engineering in the Process Industries (New York: McGraw-Hill Book Company, 1960).Google Scholar
  13. 13.
    John Victor Busch, “Primary Fabrication Methods and Costs in Polymer Processing for Automotive Applications” (Master’s thesis, Massachusetts Institute of Technology, Cambridge, MA, 1983).Google Scholar
  14. 14.
    Frank Remsen Field III, “Application of Multi-Attribute Utility Analysis to Problems in Materials Selection” (Ph.D. thesis, Massachusetts Institute of Technology, Cambridge, MA, June 1985).Google Scholar
  15. 15.
    Richard Roth, Jeff Dieffenbach, and Jacqueline A. Isaacs, “Economic Analysis of the Ultra Light Steel Auto Body,” SAE International Technical Paper No. 982399 (Warrendale, PA: SAE International, 1998).Google Scholar
  16. 16.
    David A. Hounshell, From the American System to Mass Production, 1800–1932: The Development of Manufacturing Technology in the United States (Baltimore, MD: The Johns Hopkins University Press, 1984).Google Scholar
  17. 17.
    Ramon Casadesus-Masanell and Daniel F. Spulber, “The Fable of Fisher Body,” Journal of Law and Economics, 43(1) (April 2000), pp. 67–104.CrossRefGoogle Scholar
  18. 18.
    Richard N. Langlois and Paul L. Robertson, “Explaining Vertical Integration: Lessons from the American Automobile Industry,” The Journal of Economic History, 49(2) (1989), pp. 361–375.CrossRefGoogle Scholar
  19. 19.
    Michael DeShawn Johnson, “A Methodology for Determining Engineering Costs and Their Effects on the Development of Product Families” (Ph.D. thesis, Massachusetts Institute of Technology, Cambridge, MA, 7 May 2004).Google Scholar
  20. 20.
    Porsche Engineering Services, “Ultra Light Steel Auto Body: Phase 2 Findings,” Tech. Rep. 1.0.2 (Ultra Light Steel Auto Body Consortium, 1998).Google Scholar
  21. 21.
    Automotive Applications Committee. “ULSAB-AVC (Advanced Vehicle Concepts),” Tech. rep. (Southfield, MI: American Iron and Steel Institute, January 2002), AVC1. [Accessed August 15, 2006.]Google Scholar
  22. 22.
    Auto/Steel Partnership, “Lightweight Front End Structure: Phase I & II-Final Report,” Tech. Rep. (Auto/Steel Partnership, October 2006); [Accessed August 10, 2006.]

Copyright information

© TMS 2007

Authors and Affiliations

  1. 1.the Materials Systems LaboratoryMassachusetts Institute of TechnologyCambridgeUSA

Personalised recommendations