Value Analysis


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It is mainly related to Management Accounting.

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Value Analysis

  1. 1. Value Analysis Name Roll No. Manish Shishodia 30 Mehul Patel 10 Adrian D’souza 14 <ul><li>Prof. Bharat Shah </li></ul><ul><li>SMBA - 06 </li></ul>
  2. 2. What is the Value Analysis? <ul><li>It is an orderly and creative method to increase the value of an item. This &quot; item&quot; can be a product, a system, a process, a procedure, a plan, a machine, equipment, tool , a service or a method of working. Value Analysis, also called Functional Analysis. </li></ul><ul><li>value of an item = performance of its function / cost </li></ul><ul><li>(The value of an item is how well the item does its function divided by the cost of the item (In value analysis value is not just another word for cost) </li></ul><ul><li>  </li></ul><ul><li>An item, that does its function better than another, has more value. Between two items that perform their function equally well, the one that costs less, is more valuable. </li></ul>
  3. 3. ‘ Value Analysis Concept : Low Cost, Best Value’ <ul><ul><ul><li>Best Value = Low Cost + Justified Additions </li></ul></ul></ul>High Cost Low Cost Best Value
  4. 4. How to improve the Value? <ul><li>Component cost reduction of the product </li></ul><ul><li>Relating the cost of components to their function contributions. </li></ul><ul><li>Secondary functions could be modified or eliminated to reduce product cost. </li></ul><ul><li>Providing a method of communication within a product development team and achieving team consensus </li></ul><ul><li>Facilitating flexibility in thinking and exploring multiple concepts </li></ul><ul><li>Focusing on essential functions to fulfill product requirements </li></ul><ul><li>Identifying high cost functions to explore improvements </li></ul>
  5. 5. Why Value Analysis is needed ? <ul><li>Assessing Customer Needs & Affordability </li></ul><ul><li>Capturing Customer Needs and Priorities </li></ul><ul><li>Obtaining Customer Feedback on Value </li></ul><ul><li>Product Planning </li></ul><ul><li>Reduced material use and cost </li></ul><ul><li>Reduced distribution costs </li></ul><ul><li>Reduced waste </li></ul><ul><li>Improved Profit Margins </li></ul><ul><li>Increased Customer Satisfaction </li></ul><ul><li>Increased employee morale </li></ul>
  6. 6. Diminishing Marginal Utility <ul><li>Defination : </li></ul><ul><ul><li>A law of economics stating that as a person increases consumption of a product – “ while keeping consumption of other products constant - there is a decline in the marginal utility that person derives from consuming each additional unit of that product .” </li></ul></ul>
  7. 7. ‘ Diminishing Marginal Utility - Study <ul><li>Example: </li></ul>80% 3 rd time 3 60% 4 th time 4 40% 5 th time 5 30% 6 th time 6 -20% 10 th time 10 Decreasing -5% 9 th time 9 Lowest 0% 8 th time 8 10% 7 th time 7 90% 2 nd time 2 Highest 100% 1st tme 1 Level Satisfaction Consumption Units
  8. 8. Value Analysis - Any Questions <ul><li>? </li></ul>?
  9. 9. <ul><li>Thank you </li></ul>