Traditional or Additive Manufacturing? Assessing Component Design Options through Lifecycle Cost Analysis

We consider an original equipment manufacturer that can either design a system component that is produced with traditional technology, or design an alternative component that is produced with additive manufacturing (AM). Designing either component requires a technology specific one-time investment and the components have different characteristics, notably in terms of production leadtime, production costs and component reliability. We support the design decision with a model that is based on evaluating the lifecycle costs of both components, covering design costs, maintenance and downtime costs, and performance benefits. We derive analytic properties of the required reliability and costs of the AM component such that its total lifecycle costs break even with that of its regular counterpart. Through our analysis, a numerical experiment and cases from two different companies, we find that component reliability and production costs are crucial to the success of AM components, while AM component design costs can be overcome to a certain degree by generating performance benefits or by using the short AM production leadtime to lower the after-sales logistics costs.