Value added is an activity is considered value-added when some customer is willing to pay more for the additional output.
Those are examples of value-added components of a product:
Value-Added is the difference between the cost of inputs and the value or price of outputs
One equation for value:
Value = Function/cost
- Value Analysis
Value analysis is the examination of the function of parts and materials in an effort to reduce cost and/ or improve product performance.
The primary objective of value analysis is assess how to increase the value of an item or service at the lowest cost without sacrificing quality.
Some ways to increase value at low cost without sacrifice:
- increase the functionality or use of a product or service while holding costs constant
- reduce cost while not reducing functionality
- increase functionality more than cost.
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