Definition of Value analysis:
Purchasing: Examination of each procurement item to ascertain its total cost of acquisition, maintenance, and usage over its useful life and, wherever feasible, to replace it with a more cost effective substitute. Also called value-in-use analysis.
Manufacturing: Systematic analysis that identifies and selects the best value alternatives for designs, materials, processes, and systems. It proceeds by repeatedly asking can the cost of this item or step be reduced or eliminated, without diminishing the effectiveness, required quality, or customer satisfaction? Also called value engineering, its objectives are (1) to distinguish between the incurred costs (actual use of resources) and the costs inherent (locked in) in a particular design (and which determine the incurring costs), and (2) to minimize the locked-in costs.
The systematic and critical assessment by an organization of every feature of a product to ensure that its cost is no greater than is necessary to carry out its functions.
How to use Value analysis in a sentence?
- At todays meeting we were shown a value analysis that showed the exact cost of the product when we compared the different material options.
- The value analysis had concluded that our Director of Operations idea was optimal as we had forecasted significant future profits.
- Although their Christmas Rainbow Glitter line had proved to be a reasonable success, it was noted that some of the dyes used were quite expensive compared to their usual line, a fact that made further value analysis of the line a prerequisite before considering the possibility of a second Christmas line.
- He tended to analyze problems using straightforward frameworks such as present value analysis and basic valuation models.
Meaning of Value analysis & Value analysis Definition