Life cycle cost analysis
From Free net encyclopedia
A life cycle cost analysis calculates the cost of a system or product over its entire life span.
The analysis of a typical system could include costs for:
- planning,
- research and development,
- production,
- operation,
- maintenance,
- disposal or salvage.
This cost analysis depends on values calculated from other reliability analyses like failure rate, cost of spares, repair times, and component costs.
Sometimes called a "cradle-to-grave analysis".
A life cycle cost analysis is important for cost accounting purposes. In deciding to produce a product or service, a timetable of life cycle costs helps show what costs need to be allocated to a product so that an organization can recover its costs. If all costs can not be recovered, it would not be wise to produce the product or service.
See also: Product life cycle management, Technology lifecycle, Crossing the Chasm, spend management