Cost modelling as decision support when locating manufacturing facilities

This paper presents a methodology for cost estimation in developing decision support for production location issues.
The purpose is to provide a structured work procedure to be used by practitioners to derive the knowledge needed to make
informed decisions on where to locate production. This paper present a special focus on how to integrate cost effects during
the decision process. The result is a structure of cost estimation tools aligned to different steps in the work procedure. The
cost models can facilitate both cost estimation for new production configurations and cost simulations to analyse the risks of
wrong estimations and uncertainties in the input parameters. Future research aims to test the methodology in ongoing transfer
projects to further understand difficulties in managing global production systems. Cost is usually estimated, in existing models
and methods presented in the literature, on a too aggregated level to be suitable for decision support regarding production
system design. The cost estimation methodology presented here provides new insights on cost driving factors related to the
production system.