Empirical study of use of life cycle cost analysis modelling for enterprise decision making

EMPIRICAL STUDY OF USE OF LIFE CYCLE COST ANALYSISMODELLING FOR ENTERPRISE DECISION MAKINGAYSUN AYTOKABSTRACTLife cycle cost is a concept, which covers all types of costs like research anddevelopment cost, initial investment cost, operation and maintenance cost, and phase outcost of a system, an equipment or a facility. Then, life cycle cost analysis is a methodologyand chain of procedures to calculate all possible costs of a system, a product and a facilitystarting from concept development to research and development, operation, maintenanceand phase out.Performed life cycle cost analysis study showed that, operation and supportcosts, which are the main cost drivers, are generated by the use of the system or product. Inconsequence of this, it was the conclusion that, during procurement or production decisionsnot only the initial costs but also all the costs, which will be generated during the life cycle,should be taken into consideration.The objective of this thesis study is to show that the Life Cycle Cost Analysiscan be used as a decision tool in companies. Towards to this objective, in the first chapterof the study, life cycle phases, life cycle cost concept and, the definition of life cycle costanalysis, objectives, history, benefits, limitations and related concepts of cost estimationand learning curve are examined. In the second chapter, the cost analysis on research anddevelopment, investment, operations and support, and phase out components of the lifecycle cost and the use of life cycle cost in decision making is discussed. In the thirdchapter, formulation of life cycle cost analysis to reach the life cycle cost of the system orproduct. The fourth and last chapter holds the application for a company which operates inthe field of plastic kitchenware in order to show the applicability of life cycle cost analysisthe companies.