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Globalization has provided excellent opportunities for the global manufacturing community together with a stringent barrier on cost control. Target costing has emerged as one of the main tools in aiding the manufacturers to be globally competitive. This paper analyses the effect of tools such as quality function deployment (QFD) and value engineering (VE) on target costing and explores the way in which these tools assist in achieving the target cost. The target costing model developed by Cooper and Slagmulder (Cooper, R. and Slagmulder, R., Target Costing and Value Engineering, Productivity Press, New York, NY, 1997) has been modified and tools such as QFD and VE have been incorporated in the model. Due to inherent uncertainties in the associated cost of various elements, the model has been further strengthened with the use of fuzzy logic. The theoretical model developed was implemented in an Indian auto component manufacturing company and the results were analysed. Target costing significantly relies upon QFD and VE for its effective implementation. Uncertainty in cost estimation plays a significant role in the target costing process since any variation in cost violates the cardinal rule of target costing, “the target cost should never be exceeded”. Fuzzy logic plays a vital role in accounting for uncertainty in the target costing process and gives a different perspective to arrive at the function cost. A functional approach (VE) combined with QFD backed by fuzzy approach appears to work effectively for a target costing process that is evidenced from the case study. It appears that the model developed will work satisfactorily for an industrial product and the validity of the model for fast moving consumer goods has to be ascertained.

This study aims to examine the impact of implementing target costing and continuous improvement techniques in industrial companies operating in southern Palestine on achieving sustainable competitive advantage (SCA). The study mainly assesses the level of application of these techniques by Palestinian industrial companies (PICs). Furthermore, it evaluates the extent to which the integration of these two methods can impact SCA, by producing cost-effective and innovative products that meet customer demands and needs, while simultaneously achieving continuous development of the company and an SCA.

A descriptive analytical approach was used to study the target costing and continuous improvement techniques employed by industrial companies in southern Palestine. A questionnaire was administered to 415 companies in the southern West Bank to collect data on the application of target cost and continuous improvement and their impact on SCA, measured through market share, differentiation and cost reduction. Control variables, such as company age, size (measured by the number of employees) and industrial sector classification were also included in the study model.

The findings of the study revealed that the PICs apply target costing and continuous improvement at a high level. Furthermore, all dimensions of achieving SCA were found to be achieved at a high level, with market share being the most prominent. The study also found that the integration of the target costing and continuous improvement had a positive impact on achieving SCA in the PICs. However, the study found no impact on company size, age or industrial sector on achieving a competitive advantage in terms of market share or other results.

The current study was limited to the application of strategic management methods to companies within the industrial sector only. This may constitute a limitation because it neglected other sectors. Likely, another limitation was the difficulty of obtaining the quantitative numbers needed for some quantitative variables that pertain to that type of industrial companies, which are mostly family companies that could not be regulated by the local companies' law to disclose their financial statement.

If industrial companies have ambitions to reduce production costs from the planning and design stage to set the target selling price. It is based on the understanding and awareness of customers' desires while maintaining the quality of products according to the best methods of improvement and innovation; therefore, this can be achieved by using the target costing and the continuous improvement techniques through reviewing the current study and its results.

The current study sought to link two methods, simultaneously and complementary, with each other of the strategic methods of managerial accounting, which helps the companies to offer their best to attract customers, develop the product or service and maintain their continuity in a changing labor market that enables it to achieve sustainable and competitive advantage.

This study is unique in that it explores the impact of the integration of target costing or continuous improvement techniques (Kaizen) on achieving SCA in Palestine industrial companies. While previous studies have examined either target costing or continuous improvement techniques separately, this study enhances the integration of these two methods to achieve SCA.

The target costing method works “backward” from traditional cost‐plus methods and begins with a targeted sales price for a product. This price is set based on what the customer is willing to pay. It considers not only the preferred current selling price but also the later life cycle pattern of prices. This technique has key managerial implications. This article considers these implications along with implementation guidelines. Examples of industries successfully using target costing are included. Ongoing controversies concerning where the techniques can best be used are discussed. Further considered are international differences in target costing as well as challenges of global outsourcing along the supply chain. The article ends with implementation challenges, significance for practice, and suggestions for future research.

Despite appearing in the literature over 10 years ago as a potentially exciting cost management technique, there is still limited agreement about the nature of target costing. The purpose of this study is to explore the characteristics of target costing, and to test whether these characteristics were adopted in three European companies that used target costing.

This paper draws on case study data, collected at three manufacturing companies (consumer electronics, machinery, and transportation equipment).

The paper identifies eight characteristics of target costing, based on the early Japanese case descriptions. These characteristics are related to the way a target is set and how progress towards that target is measured. The findings of the case studies confirm these characteristics. However, some differences were found regarding the interpretation of the strict rule that “the target cost cannot be exceeded at product launch”.

The results indicate that future research on the adoption of target costing cannot be disconnected from its characteristics. Further studies might investigate whether degree of openness to suppliers, leadership position, time pressure and position in the supply chain can explain the noted differences in characteristics among companies.

The characteristics identified in this paper provide an aid to researchers and managers considering target costing. Detailed case descriptions provide best practices examples for other companies.

This study is the first empirical paper concerned with describing the typical characteristics of target costing. By exploring the characteristics, we hope to inspire others to further explore this interesting phenomenon.

As there is scant research outside Japan on the implementation of target costing, the purpose of this research is to examine target costing practices in New Zealand.

A mail questionnaire survey was sent to 80 New Zealand manufacturers, with a response rate of 31 (39 per cent).

A total of 12 of the 31 respondents use target costing. Findings on the use of target costing that contrast with or add to prior studies include the following: target costing is being applied to existing products; the manufacturing department is highly involved in target costing; the involvement of suppliers in target costing is relatively low; considerable adjustments are made to the calculated allowable costs, especially in order to assist sales of future products and to ensure the achievement of target costs; and higher achievement of target costs is associated with higher firm performance. The goals of target costing and the departments involved in the practice were similar to those in prior studies.

The sample size and minimal number of firms actually using target costing has made it difficult to obtain statistically significant results. The survey method prevents follow‐up questions and clarification of ambiguities. Single measures of performance and strategy were used.

This survey provides academic researchers and teachers and firms implementing or using target costing systems with a greater understanding of how target costing is being used by New Zealand manufacturers, as well as adding to the scant research on target costing outside Japan.

The main purpose of this study is to provide healthcare institutions with a management accounting framework that helps them achieve their quality goals and cost targets when providing services under bundled payment schemes.

After providing a theoretical framework on both bundled payments and target costing, the success factors of the former are compared with the principles of the latter in order to analyze the compatibility and complementarity of these models. Afterwards, an example of their potential combination in practice is introduced and ideas for future research are suggested.

It is concluded that, apart from presenting similar underlying goals as regards quality and cost, bundled payments and target costing display elements in common that make them compatible from a theoretical standpoint.

Because bundled payments models are relatively new, studies on their compatibility with managerial techniques emerging from industries other than healthcare do not abound in the literature.

This article examines the use of target costing as a means to improve the management of supply chains. A discussion of the shortcomings of traditional and activity‐based cost management approaches to supply chain management provides the basis for exploring the use of target costing within supply chains. Customer requirements and supply chain relationships are identified as key criteria for selecting the most appropriate method of target costing for supply chains. Price‐based, value‐based, and activity‐based cost management approaches to target costing are discussed, and recommendations for their use based upon customer requirements and supply chain relationships are offered. Conclusions are provided on the use of target costing to enhance a supply chain’s ability to improve customer satisfaction.

The main objective in writing this paper and conducting this research is to enhance the productivity in manufacturing operations by making them cost effective.

This paper presents a target‐costing system and model developed for the turning operation and it has a user interface designed in Microsoft Visual Basic® with a database developed by using Microsoft Access®. An algorithm is developed to apply the concepts of target‐costing that selects the machining parameters and then determines the machining cost. A geometric programming model (Gopalakrishnan and Al‐Khayyal) was used in the development of this system.

The research determined that target‐costing models can be developed for the manufacturing industry and can be implemented in realistic manufacturing environment. The research also showcased the utility of the target‐costing model in terms of the underlying detailed system level parameters.

The research focuses on one manufacturing process but can be extended to other manufacturing processes and business cost and profit centers for providing overall and enhanced benefits at the corporate levels.

The research details the development of a model that has been validated using practical shop floor data, hence implying its application in a wide variety of situations.

The original value of the paper lies in identifying the critical parameters and modeling approach towards target‐costing.

The problem that original design manufacturing (ODM) companies encounter with the request for quotation (RFQ) process is that there is no effective and efficient methodology for them to formulate accurate and profitable RFQs. The purpose of this paper is to present a quality function deployment (QFD)‐, concurrent engineering (CE)‐, and target costing‐based methodology for ODM companies to formulate accurate and profitable RFQs.

From eight Taiwan electronics ODM companies, 15 people are interviewed to understand their current methods for formulating RFQs and the problems of these methods. Based on the interview results, it was decided to make use of the merits of QFD, CE, and target costing by integrating them into the proposed methodology.

A case study is presented to illustrate a successful application of the proposed methodology in a case company. The case study shows integrating QFD, CE, and target costing into the proposed methodology allows the authors to effectively and efficiently formulate an accurate and profitable RFQ for the case company.

The interview sample quantity of this study is limited to eight Taiwan electronics companies, which is insufficient to represent all ODM companies in various industries. For the future research, it is suggested researchers collect more samples from different industries in order to verify the effectiveness of the proposed methodology in ODM companies from different industries.

This paper aims to integrate QFD, CE, and target costing to come up with a systematic ten‐step approach that can accurately formulate the three parts of an RFQ: the product specifications proposal, the product price quotation, and the product development schedule. By adopting this methodology, ODM companies can provide accurate and profitable RFQs to ODM customers, thus increasing their chances of obtaining ODM business.

Focusses on the use of target costing for new product development. This approach concentrates on determining costs for a product during the planning and design stage. Also describes the use of cross‐functional teams made up of industrial marketers, cost accountants and others critical to the design and manufacturing decisions required for determining the price and features with which a product is most likely to appeal to potential buyers. After deducting the desired profit margin from the projected selling price, planners develop estimates of each product element that make up a product′s costs for design, manufacturing, sales and marketing. Further analysis is carried out to identify and estimate the cost of each component that makes up the finished product. Stresses the critical role that management accountants and other members of an organization can play in the design and manufacture of a new product at a specified price.