Question

Define life-cycle cost (LCC). How does LCC relate to value? How are economic factors considered in the system design process?

Answer 1

Life cycle cost is defined as the total of all costs involved in the process from start to the end. It takes into account design, manufacturing, marketing, etc... that are all involved from starting stage to the ending stage.

Life cycle cost help in assessing the value of the product/service by giving information on the total possible costs associated with the product. It helps in determine the price of the product that needed to be to help in increasing profitability. It also helps in restructuring the cost structure and other involved in it.

The type of economic factors considered in the system design process are:

1. The land/materials acquisition costs associated with it.

2. Financial and monetary costs requirements

3. Operational and maintenance costs that needed in the present and future.

4. Fuel costs and R and D costs.