Research on complex product cost estimation based on the N‐GM (0, N) model

Abstract

Purpose

The purpose of this paper is to propose a prediction model to predict the cost of complex products with lack of data. The cost estimating is one of the key elements of arguments around technological economy and investment decision‐making process of complex product.

Design/methodology/approach

A complex product has many characteristics, such as complex structure, large investment, high risk and it usually falls into small‐batch‐production category. Its cost estimation samples are small and cost data are very limited. Based on the characteristics of complex product and cost estimating, this paper introduces performance parameters sequence of associated known data, establishes an N‐GM (0, N) model of characteristic sequence with straddle missing data.

Findings

On the basis of the known key performance parameter sequence, N‐GM (0, N) model is used to predict the grey interval of overall cost vacancy data. Overall cost vacancy data is whitened by sorting reference sequence and realizing complex product overall cost estimation.

Practical implications

The method introduced in the paper can be used to solve practical problems, especially cost prediction of complex products with poor data. The model is also applied on the overall cost and the key component cost estimation of similar but different complex products. Moreover, it provides potential theoretical support for the development of complex product industry in the future.

Originality/value

In this paper, the complex product, which now plays a strategic industrial role in China, is systematically studied by utilizing a new methodology based on grey systems, especially the cost evaluation of the complex product. The use of grey correlation analysis in screening control key item index of complex product cost, the overall cost sequence of the complex product as related sequence and sorting reference sequence, the paper predicts and whitens vacant key item index, obtaining the key item cost index of complex product.

Citation

Hongzhuan, C., Kaifeng, F. and Zhigeng, F. (2013), "Research on complex product cost estimation based on the N‐GM (0, N) model", Grey Systems: Theory and Application, Vol. 3 No. 1, pp. 46-59. https://doi.org/10.1108/20439371311293697