The use of portfolio management with target costed process oriented products under conditions of uncertainty
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One of the many cost management tools that are presently in use is target costing. An iterative process, target costing attempts to reduce the cost of manufacturing products by using value engineering techniques so that identified target costs can be realized. As a step improvement program, the ability of a company to obtain its target cost in not always certain. Target profits from individual products are grouped together into portfolios and then managed according to company strategic profit plans.
This report investigates methods used for identifying the uncertainties that can exist in the target costing process and suggests the potential use efficient portfolio techniques for the management of process oriented or continuous products. The report also suggests a number of follow-on projects that could encompass the use of specific decision support systems for the examination of both target costing uncertainties and portfolio management.