This paper tries to analyze McDonald's proposed decision to drop the use of PS in its foam forms in favor of an alternative such as paperboard. At the time, McDonald's consumed 34,100 metric tons/year of PS, and 18,200 will be eliminated with this decision.
Product-related costs are examined in two categories: production and post-production. Technical cost modeling is used to simulate manufacturing costs, and life-cycle cost analysis (LCCA) is used to incorporate these manufacturing costs to calculate post-production costs. Sensitivity analyses evaluate and compare various options and scenarios.
Technical cost models are process-specific tools implemented on computer spreadsheets and have been applied for a variety of purposes including material/process/design comparisons, effects of manufacturing process or environment changes, merits of design/process improvements and to simulate manufacturing costs for complete production and assemblies. In this case, these models were used to assess manufacturing costs. The model divides the total product cost into variable and fixed cost elements. Costs are assigned to each block or unit operation from a process flow diagram. Users supply information on product specifications, exogenous cost factors, process-related factors, and a material database. Process parameters are arrived at using regression-based algorithms or through user input.
Using add-on modules, technical cost models can be extended for various types of analyses including ABC simulations, LCCA, business cost analysis, cost-performance tradeoffs, and design for manufacturability. In this case LCA models were used to calculate life-cycle product costs. Production costs are generally carried forward from appropriate technical cost models. LCCA follows a descriptive approach that requires users to supply specific inputs. LCCA can also be implemented on computer spreadsheets.
| Raw material acquisition | --- |
| Manufacturing stage | |
| Use/reuse/maintenance | |
| Recycle/waste management | |
The LCCA in this paper aims to measure the costs and revenues experienced by the manufacturers and consumers through the useful life of the product. That is, "cradle to grave" costs that include impacts of material inputs of the product are not assessed. Production (manufacturing) and post-production are considered.
| Conventional | |
| Potentially hidden | |
| Contingent | --- |
| External | --- |
Fixed and variable cost elements are considered in estimating manufacturing or production costs. Utility or energy costs are considered as a variable cost element. Post-production costs considered include transportation, storage, installation, maintenance, and disposal. Disposal is taken to mean landfilling, incineration, or recycling.
Results of the cost simulations and sensitivity analyses are presented in the paper. The major conclusions are as follows:
McDonald's claims that the decision was prompted more by public outcry than by actual evidence. However, it is important to note that this study does not include the entire life-cycle in the analysis and leaves out less-tangible internal and external and contingent costs. Inclusion of these factors could lead to different conclusions.
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