The present trend towards shorter product lives means that manufacturers are
faced with less time whereby production costs can be controlled and reduced. As a result
many companies are turning towards the use of Systems Engineering and cost
management techniques that are intended to reduce product costs during the design phases
of the product life.
One of the many cost management tools that are presently in use is target costing.
An iterative process, target costing attempts to reduce the cost of manufacturing products
by using value engineering techniques so that identified target costs can be realized. As a
step improvement program, the ability of a company to obtain its target cost in not always
certain. Target profits from individual products are grouped together into portfolios and
then managed according to company strategic profit plans.
This report investigates methods used for identifying the uncertainties that can
exist in the target costing process and suggests the potential use efficient portfolio
techniques for the management of process oriented or continuous products.
The report also suggests a number of follow-on projects that could encompass the
use of specific decision support systems for the examination of both target costing
uncertainties and portfolio management.
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