Product development cost estimation in mass customization

The ultimate goal of mass customization is to achieve economies of both scope and scale. This goal implies a conflict between customization and economy of scale (or mass production) in the traditional manufacturing paradigm. However, recent developments in computer and Internet communication technologies, concurrent engineering, and modular design methodology provide concepts, methods and technology infrastructure for realizing mass customization. One of the findings from numerous research efforts on mass customization is the use of e-commerce technologies to manage a product development chain that links customers, suppliers and manufacturers together to approach concurrently customized products in a short time and at the low cost level of mass production, i.e., mass customization. To ensure the success of mass customization in a product development chain, a rapid, automatic yet accurate cost estimate and control system is needed. This paper presents a cost index structure, which is a novel data structure, together with two novel cost estimate methods, viz. the generative cost estimate method and the variant cost estimate method, for the development of a semi or fully automatic computer-aided cost estimate and control system in mass customization. Finally, an industrial case is reported in the paper to illustrate the principles and feasibility of the proposed data structure, methods and system framework. © 2006 IEEE.