Product Description
These products are kitchen appliances at IKEA. The Hood 1 is a low price range product with simple design. It can be used as a built-in or wall-mounted hood with the combination of the Chimney for Hood 1. The Hood 3 and Hood 4 are medium price level products with high sales volumes. The Hood 2 is a high price range product with a higher recorded performance (Asking & Gustavsson, 2011).
The model specifications are here with presented in Table 1
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Total Cost Product
This outcome shows differences in design and performance of the products. The major difference here is observed between these two product types, namely; hoods and induction hobs, and because of this, the results will be analyzed separately in various sections, the differentiation of reference products, in terms of design and performance (Asking & Gustavsson, 2011). The estimated product cost includes full product costs that consider the cost for tier one supplier. This clearly shows that the total product cost go higher owing to high internal costs at IKEA that are added, for example the storage costs, and overhead expenditure.
The retail prices in Figure 2 are altered by a conversion factor.
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The product cost is a concern for every manufacturer as he/ she will be challenged in his bid to locating the right track and measurement of costs needed during the earlier development processes (Asking & Gustavsson, 2011). High, complex and frequent changes concerning the bill of materials bring this hardship to a number of suppliers.
The Cost incorporates the product changes based on the cost analysis. This approach allows the right performance of the cost analysis, creating up to date cost reports that are accurate as well. Cost gives empowerment for better and smarter decisions gearing to meet the targeted costs.
References
Asking, P., & Gustavsson, S. (2011). Cost Breakdown Analysis-A Study Of The Product Costs In The Kitchen Appliances At IKEA Of Sweden. Retrieved from: http://studentarbeten.chalmers.se/publication/148459-cost-breakdown-analysis-a-study-of-the-product-costs-in-the-kitchen-appliances-at-ikea-of-sweden
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