Page 68 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

Value Creation for Service Product 49

2. Monetary or material worth.
3. Worth in usefulness or importance to the possessor; utility or merit.
Value is also related to worth. Worth is defined as the quality that renders
something desirable or valuable or useful.

Many value engineering researchers discuss the nature of value extensively.
Fallon (1980) states that worth is a simple concept; it becomes value when
it is related to cost. He further states that cost is a necessary component of
value. O’Brien (1986) further defines value as the ratio of worth and cost. In
this definition, worth is defined as an appraisal of the properties of product,
so it is essentially an appraisal of the function of the product. In other words,
value is the ratio of function to the cost. In this case, the function is defined
as what the product does for the customer.

Many value engineering researchers and practitioners have developed
several precise definitions for value. Several of them are listed here.

(Bryant 1986)
+
Value V = wants needs
resources
+
sellfunctions usefunctions
=
+
dollar people
(Harris 1968)
worth
V =
effort
(Kaufman 1981)
V = functions
cost
(Wasserman 1977)

V = function = utility = performance
cost cost cost

(Fallon 1980)
V = objectives
cost

In each of these definitions, the denominator is a unit that can be measured
by dollars, effort, resources, work force, and so on. Eventually they can all