Life Cycle Costing Literature

CHAPTER 2: Literature Review
2.1 General
This chapter will focus on the literature review done to form a foundation of knowledge on the concept of life cycle costing, as well as more specific and in-depth investigation and researches on the Malaysian chicken broiler industry. This review on reading materials and research outcomes will facilitate this project in providing important facts and information as well as covering the basics of life cycle costing concepts and mechanisms, instruments, parameters to results and outcomes of previous researches by others in the academia as well as the industry.
2.2 Life Cycle
To achieve a comprehensive understanding of life cycle costing, the basic concept of life cycle must be understood first. The term

Since the release of the document, the U.S. Department of Defense subsequently released three more guidebooks in the early years of 1970. These publications have since been made the thresholds of life cycle costing. Consequently, many practices and theory of life cycle costing have taken place and many publications on it have since appeared.
A brief search for the definition of life cycle costing would render many different answers pointing to a generally similar definition. Firstly, it is important to understand what life cycle cost is. Blanchard & Wolter (1998) states that life cycle cost refers to all costs associated with the system as applied to the defined life cycle. In general, life cycle cost includes research and development cost, production and construction cost, operation and support cost, retirement and disposal cost. Life cycle cost is determined by identifying the many applicable functions in each phase of the product life cycle, costing these functions, applying the appropriate costs by function on a year-to-year schedule, and ultimately accumulating the costs for the entire span of the life cycle. Life cycle cost includes all producer, supplier, customer (user), maintainer, and related costs. Therefore,

While conventional costing is essentially based on Cost Types I and II (direct and indirect), life cycle costing usually extends the scope, and includes what it considers to be a cost, as seen in Type III (contingencies), often adds Type IV (intangibles), and sometimes aspires to involve Type V, primarily within the domain of public sector procurement (cited in Vlachy, 2014).
Cost Type Description
Type I:
Direct Direct costs of capital investment, labor, raw material, waste disposal. May include both recurring and non-recurring costs.
Type II:
Indirect Indirect costs not allocated to the product or process (overhead). May include both recurring and non-recurring costs.
Type III:
Contingent Contingent costs such as fines and penalties, personal injury or property damage liabilities, production or service disruption, competition response