Explain the various stages of product life cycle, Managerial Accounting

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Various stages of product life cycle

Typically the life cycle of a manufactured product will consist of the following stages:

1) market research: before any investment in made the investor must believe that what the company proposes to make can be sold at a price which will allow a profit to be made. This usually means that market research will establish what product the customer wants how much he is prepares to pay for it and how many he will buy.

2) Specification : when market research has establish what is to be made, it will be necessary to turn the general statement of requirements into a detailed specification which will tell the designer and manufacturing engineer precisely what is required. The design specification will provide such details as needed life maximum permissible maintenance costs maximum permissible manufacturing cost the number needed the delivery date the required performance of the product.

3) Design : with a precise specification the designers can produce the drawings and process schedules which define the geometry of the product and some of the manufacture processes .

4) Prototype manufacture : from the drawing it will be possible to manufacture a small number of the product. These prototypes will be used to make the product and eventually to demonstrate that it meets the needs of the specification.

5) Development: when a product has been made for the first time, it is essential to prove that it meets the needs of the specification and changes have to be made until it does. This period of testing and changing is development can be very expensive and often generates a large negative cash flow before any products have been sold and hence before any positive cash flow have been generated.

6) Tooling : when a product is shown to meet the requirements the specification and if calculation suggest that it will be profitable the decision will be make to make it to sell. This is not a decision that will be taken lightly because in major cases the decision to make a product for sale is commitment to tool up for production. Tooling up for production can mean building a production line costing several lakhs of rupees building expensive jigs buying special purpose machine tools or in some other say making a very large initial investment.

7)  Manufacture: the manufacture of a product involve the purchase of the raw materials the purchase of bought out component the use of labor to make and assemble the product and the use of supervisory labor.

8) Selling : when the product is fit to sell and available it may be necessary to spend money on a campaign to sell the product.

9) Distribution: in the process of selling the product it must be distributed to the sale athletes and to the sales and to the clients.

10) Product support : when the product has been bought the customer will expect it to be supported. The manufacturing or supple will have to make sure that spares and expert servicing are available for the life of the product. The manufacturing or the supplier may even have to offer free servicing and parts replacement during the early life of the product.

11) Decommissioning or replacement: when a manufacturing product comes to an end the plant used to build the product must be re-used sold scrapped or decommissioned in away that are acceptable to society. 

 


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