Complexity cost analysis in a large product line
Author(s)Landivar Chávez, José Luis
Product line costs of complexity
Leaders for Manufacturing Program.
Sharon Novak and David Simchi-Levi.
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Hewlett-Packard's Industry Standard Servers (ISS) organization offers a large variety of server computers and accessories. The large range of options available to its customers gives way to complex processes and less than optimal resource usage. In the work presented here, a method for quantifying the costs associated with these effects is reviewed and applied to the current ISS offering. Several areas for investigation are identified including Research and Development, Sales and Marketing, Materials, Inventory, Organizational, amongst other costs that erode profits. Each area is explored through interviews and detailed modeling to arrive to a cost estimate. The end goal for estimating the costs associated with complexity is to establish a simple process for evaluating the "real" profitability of a new product introduction (NPI). Such process is enabled by implementing a set of complexity guidelines through the use of a complexity cost calculator. The end result is that HP's ISS division could see savings in the millions of dollars once the program is implemented. In the end, a set of wide reaching conclusions are drawn from the study to assist in future complexity cost analyses.
Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science; and, (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; in conjunction with the Leaders for Manufacturing Program at MIT, 2006.Includes bibliographical references (p. 73).
DepartmentMassachusetts Institute of Technology. Dept. of Electrical Engineering and Computer Science.; Sloan School of Management.; Leaders for Manufacturing Program.; Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science; Sloan School of Management
Massachusetts Institute of Technology
Electrical Engineering and Computer Science., Sloan School of Management., Leaders for Manufacturing Program.