Manufacturing cost estimation for steel product based on consumption chain: a case study in China

The paper proposes a cost estimation method which is fitted to continuous production process of iron and steel product. In order to get the steel product price and cost control target before production, estimating steel product cost accurately is very important for iron and steel enterprise. Feature costing is a topic of recent discussion related to cost management system aimed at understanding how product features influence production process costs. In this study, after analysing the existing cost estimation methods, the consumption chain model for iron and steel enterprise is constructed. Steel product cost estimation method was given based on steel product features and process characteristics. Product features were extracted from the order information and consumption chain was automatically generated by matching the product features and manufacturing process chain. Raw material cost and activity cost for steel product were calculated by analysing consumption chain. Finally, the cost estimation method was demonstrated through an application in a steel enterprise of China. Results show that the proposed cost estimation method based on consumption chain model is able to accurately estimate the costs of steel products.