Methodology for Commodity Cost Estimation Through Production Line Analysis and Simulation

In a growing competitive environment, it is essential to have a clear idea of a product’s total expenditure by estimating the component costs and correctly allocate cost drivers. Assigning exact commodity consumption costs is one of the most complicated aspects of cost engineering activities, which should be performed during the product design stage using Product Lifecycle Management (PLM). However, during the design stage, information is not complete, and it is not sufficient to guarantee the cost estimate’s adequacy and reliability. Therefore, it is necessary to monitor the production process to identify each cost variable carefully. This article aims to propose a methodology to evaluate the proper commodity consumption during manufacturing activities for the assessment of the total part cost. Moreover, it helps to generate validated data useful for decision support systems. The proposed approach is studied by analyzing a machining production line of an Italian manufacturer of components for the automotive industry. It consists of three main parts: (i) description of the production line, (ii) definition of IT architecture, and (iii) asynchronous digital twin design. Thus, after the model’s validation, the simulated data allows to analyze and estimate production expenditure accurately by the exact allocation of commodity consumption.