Target costing operationalization during product development: Model and application

Tiago Pascoal Filomena, Francisco Jos Kliemann Neto and Michael Robert Duffey

International Journal of Production Economics, 2009, vol. 118, issue 2, 398-409

Abstract: Target costing is a widely used technique for cost management during product development (PD). Despite target costing's strategic intuitiveness, its operationalization during PD requires careful decomposition of a product's constituent cost elements. The main objective of this paper is to describe an experience developing early-stage cost parameters for a specific product development process effort at a mid-sized Brazilian manufacturing company by proposing and applying a target costing model. One secondary objective is to provide a model to operationalize "target costing" by breaking down cost targets into product parts, features and common elements, focusing on creating parameters for cost control during PD. Using a detailed case study, target costing is explicitly decomposed in four different stages in a PD environment. All these are intended as a complement to the strategic use of target costing.

Keywords: Target; costing; Product; development; Operationalization; Cost; Feature; costing (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:118:y:2009:i:2:p:398-409

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