Question

In value engineering, the term value refers to
1. \(\frac{cost}{utility}\)
2. \(\frac{utility}{cost}\)
3. utility × cost
4. None of the above

Answer 1

Correct Answer - Option 2 : \(\frac{utility}{cost}\)

Value analysis/engineering

• Value analysis aims at a systematic identification and elimination of unnecessary costs.
• Value analysis examines the design, method of manufacturing, the material used, function and cost of each and every component in order to produce it economically without decreasing its utility, function or reliability.

Value

• Value is the price we pay for a product, process, material or service required to perform a specific function with the required quality and reliability.
• Value can be defined as the combination of the quality, efficiency, price and service which ensures the ultimate economy and satisfaction of the purchaser.
• We can express value in a mathematical way, as

\(Value = \frac{{utility\;or\;function}}{{cost}} = \frac{{worth\;to\;you}}{{price\;you\;pay}}\)

Thus the value of a product can he increased either by increasing its utility with the same cost or by decreasing its cost for the same utility.