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Value Engineering  163

        We now need to determine the cost of each function by distributing the cost
        of each part to its related function. For example, the cost for the pencil body
        is 0.94 cent, 50 percent of the pencil body cost is used to perform the
        function “transmit force,” 40 percent of its cost is used to perform the function
        “support lead,” 10 percent of its cost is used to perform the function “display
        information.” This breakdown of cost is based on qualified judgment from
        the whole team. It is subjective; hopefully it is not too biased because it is
        based on the consensus of the team. By adding all the cost portions from all
        relevant parts for a function, we can get the cost for performing that
        function. For example, in Table 7.11, the cost of the “transmit force”
        function consists of 25 percent of the metal band cost, which is 0.06 cent,
        and 50 percent of the pencil body cost, which is 0.47 cent; therefore the cost
        of the “transmit force” function is 0.53 cent.

        We also need to determine the best cost for each function. By definition, the
        best cost is the lowest cost to adequately and reliably provide the function.
        The best way to determine the best cost of a function is by comparison to
        another function that we know there is a ‘best deal.’ For example, if a
        function is “tell time,” then we need to know what is the time precision
        requirement. The required precision might be ± 30 seconds after a month of
        use. Next, we will find a watch that has just enough to provide time with this
        precision reliably. This watch should not provide any other functions, such
        as decoration or brand-name recognition. In this way, a cheap, no-brand,
        plain, 99-cent electronic watch might be adequate. Then the best cost for the
        “tell time” function is 99 cents. To make sure we determine the best value,
        we can ask the following questions:
          1. Can we do without it? (If yes, the best cost is zero.)
          2. Does it need all its features? (If no, get rid of all unnecessary features
             and then figure out the best cost.)
          3. Is anyone buying it for less?
          4. Is there something better that can do the job?
          5. Can it be made by a less costly method?
          6. Can a standard item be used?
          7. Can another dependable supplier provide it for less?
          8. Would you pay the price if you were spending your own money?
        The best cost is not always lower than the current cost. As stated before, by
        definition, the best cost is the lowest cost to adequately and reliably provide
        this function. It is possible that in the current system this function is not ade-
        quately and reliably provided. In this case, we may have to increase the cost
        for this function. This is also why question 4 (Is there something better that
        can do the job?) is asked.
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