Page 413 - Design for Six Sigma a Roadmap for Product Development

380 Chapter Ten

With its emphasis on costs, DFE is a suitable method for evaluating
the economic feasibility of projects such as energy conservation or
solar energy, which realize their benefits primarily through fuel cost
avoidance.

10.6.2 DFE economic fundamentals
and optimization
The value of a DFE investment, for the most part, is dictated by cus-
tomer expectations. Each customer segment weighs differently factors
such as extra initial cost, operating cost, energy savings, tax implica-
tions, payback, and the overall cash flow. Understanding the impor-
tance of each of these elements to the customer is necessary to find the
correct balance of the life cycle cost. Common fundamentals that need
to be considered in the economic evaluation of environmentally friendly
design include the time value of money, opportunity costs, and the eco-
nomic equivalence of neutral or negative environmentally friendly
datum designs.
For example, in evaluating a solar project, a set of economic criteria
must be developed to help facilitate the life-cycle economic analysis. To
help clarify the DFE goals of the DFSS project, a differential analysis
should be developed from a base which would be a 100 percent envi-
ronment neutral datum design. For example, if we propose a solar
energy system to operate vehicle accessories and to reduce fossil fuel
consumption, we must analyze the base case of the conventional sys-
tem in identical vehicle environments, microclimates, and so on, as
those for which the solar system was being designed. To clarify the
financial design goals for the proposed solution, the datum cost should
be appraised. This will set the approximate value of the money that
may be spent initially. By varying the proportion of this initial invest-
ment versus the reduction in annual energy costs, various rates of
return will be obtained and used for comparison.
Several predesign tasks will play an integral part in determining
the feasibility of the DFE approach to the DFSS project as presented
in Table 10.7.

10.7 Design for Life-Cycle Cost (LCC):
Activity-Based Costing with Uncertainty
*
Activity-based cost (ABC) is a new and powerful method for estimat-
ing life-cycle design cost, in particular when coupled with uncertainty

* ABC has received this name because of its focus on activities performed in design
practice.