Performance should include the costs of a system or a component over its entire life span. Typical costs for a system may include
- acquisition costs (or design and development costs)
- transportation costs
- operating costs, such as
- cost of failures
- cost of repairs
- cost for spares
- downtime costs
- loss of production
- disposal costs
- human resources
- recovery/recycling.
A complete life cycle cost (LCC) analysis may also include other costs, as well as other accounting/financial elements (e.g., discount rates, interest rates, depreciation, and present value of money).
Teacher Resource:
Process/Skill Questions:
- What are the considerations of true cost to include in a life-cycle cost analysis?
- What is a life-cycle cost analysis, and how can it inform consumer decision making?
- When during the cycle is system or product most expensive?
- What elements of a product’s cost matter most to consumers? What elements of a product's cost do consumers traditionally ignore?