Value Analysis

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value formula

by Thomas E. Serena MD, FACS, FACHM, FAPWCA

"Price is what you pay. Value is what you get"
-Warren Buffet1

Lawrence Mills introduced the concept of Value Analysis to the manufacturing industry a half century ago. The basic idea entails analyzing the function and importance of the various parts of a product as they relate to cost. He derived the following equation2:

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