The vocabulary of a manufacturing cost calculation.
Short, quotable definitions of the terms a should-cost is built from, and what each one gives you in ARCNM. One term per section; the first sentence is the definition.
Should-cost
A should-cost is the price a part ought to have when it is made with an efficient process at fair rates — computed bottom-up from material, cycle time, setup and overhead rather than taken from a supplier quote.
ARCNM computes it from the CAD model and the drawing, and every line of the should-cost names the operation and the parameter behind it.
Manufacturing cost (Herstellkosten)
Manufacturing cost (Herstellkosten) is material cost plus production cost: direct material and material overhead, direct labour and machine time, production overhead and special direct costs such as tooling — the cost-accounting basis of a unit price before sales overhead and margin.
ARCNM decomposes it per part into material, amortised setup, run labour, machine burden, tooling, subcontract steps and overhead; the lines always sum to the headline.
Machine-hour rate (Maschinenstundensatz)
The machine-hour rate is the cost of running one machine for one hour — depreciation, imputed interest, floor space, energy and maintenance divided by the hours the machine is actually available — as laid out in VDI 3258.
ARCNM prices every operation at the machine-hour rate of the machine class in your costing environment, for the cycle and setup time it computed for the part; the operator's labour is a separate line.
Cycle time
Cycle time is the machine time needed to produce one part once the machine is set up — cutting time plus tool changes, rapid moves and handling per piece.
ARCNM returns the cycle time per operation, computed from the part's geometry on the machine class in your costing environment — not read off a rate card.
Setup time
Setup time is the one-off time to prepare a machine for a batch — fixturing, tool loading, program proving, first-piece check — and is paid once per lot regardless of quantity.
Because it amortises over the lot, setup is the main reason the unit price of a part falls with quantity; ARCNM prices the whole curve, so the effect is visible per quantity.
Lot-size curve
The lot-size curve is unit cost plotted against batch quantity: it falls as setup, tooling and order minimums amortise, and kinks where the economics change.
ARCNM returns the curve on a grid from 1 to 2,500 pieces, names the machine chosen at each quantity, and marks the optimum lot on an annual-total-cost basis — setup and holding cost included.
Pre-calculation (Vorkalkulation)
A pre-calculation estimates the manufacturing cost of a part before it is made — from drawing and model, planned routing and standard rates — to price a quote or set a target cost.
ARCNM automates it: routing, times and cost come from the CAD model and drawing, and the same calculation re-runs when the environment or the drawing changes.
Routing (Arbeitsplan)
A routing lists the operations that make a part in order — machine, setup, cycle time and secondary steps such as heat treatment and coating.
ARCNM derives the routing from the geometry and your fleet, names each step with its DIN 8580 code, and exports it alongside the cost.
Feature recognition
Feature recognition is the automatic identification of manufacturing features — holes, pockets, threads, bends, slots, bosses — in a 3D B-rep model so each can be planned and timed.
ARCNM recognises the features of a STEP model and gives each one a stable ID, so the same feature keeps its identity from one revision to the next — and the same model always yields the same features.
PMI and GD&T
Product and manufacturing information (PMI) is everything a drawing states beyond geometry — dimensions, tolerances, surface finish, treatments — and GD&T (ISO 1101 / ASME Y14.5) is its geometric-tolerance subset.
ARCNM reads PMI from the PDF drawing or natively from STEP AP242 and binds each callout to the face it constrains, so a tolerance is priced where it applies.
Design for manufacturing (DfM)
Design for manufacturing is the practice of shaping a part so it can be made reliably and cheaply — avoiding deep pockets, thin walls, unreachable features and tolerances the process cannot hold.
ARCNM flags DfM issues per feature with a severity and shows what each costs, so the trade-off is made in euros, not opinions.
Design to cost
Design to cost is developing a product against a cost target, pricing each design decision while it is still open instead of discovering the cost at the first quote.
With ARCNM a designer re-costs the part after every change to tolerance, material or geometry and sees the lot-size curve move.
Cost driver
A cost driver is the feature, parameter or decision responsible for a measurable share of a part's cost — a tight fit, a fifth setup, a hardened material, a small batch.
ARCNM ranks the drivers of every calculation with their share of the unit cost and the direction that would reduce it.
Calibration
Calibration aligns a cost model to a specific plant, supplier or region from a set of known real costs, so the model's absolute level matches reality while its structure stays physical.
In ARCNM you calibrate a costing environment from your own actuals: post known real costs, and every later calculation in that environment carries your price level, with a confidence band that says how well it fits. A part's routing and times read the same before and after — only the money changes.
Conformal prediction
Conformal prediction is a statistical method that turns a point estimate into an interval with a guaranteed coverage rate — for example a 90 % band that contains the true cost nine times in ten — without assuming a distribution.
Every calibrated environment in ARCNM comes with such a band, and it tightens as more real costs arrive.
Clean-sheet costing (cleansheet)
Clean-sheet costing builds a part's cost from zero — material, process steps, cycle times, machine rates, overhead and margin — to establish what an efficient supplier would need to charge, independent of any quote on the table.
A should-cost from ARCNM is a clean sheet computed from the CAD model and drawing rather than filled in by hand, so a buyer opens a negotiation with the bottom-up figure already itemised.
Target costing
Target costing sets the allowable cost of a part from the market price minus the required margin, then designs and sources the part to meet it — the mirror image of cost-plus pricing.
ARCNM gives the design and sourcing teams the current should-cost against that target after every change, so the gap is known while the geometry, tolerances and material are still open.
Make-or-buy analysis
A make-or-buy analysis compares the cost of producing a part in-house with the cost of buying it from a supplier at the same quantity, including setup, tooling, overhead and the supplier's lot minimums.
ARCNM runs the same part in an environment for each plant or supplier and reports the winner per lot size with the delta.
Cost breakdown (cost breakdown analysis)
A cost breakdown itemises a part's price into material, machine time, labour, setup, tooling, subcontract steps, overhead and margin, so each line can be challenged separately in a supplier negotiation.
Every ARCNM calculation returns this breakdown per lot size, with each line tied to the operation, rate and parameter that produced it.
Bottom-up vs. parametric cost estimating
Bottom-up estimating prices a part operation by operation from its geometry and routing; parametric estimating regresses cost against a few descriptors such as mass or envelope from past parts. Bottom-up explains the number, parametric only predicts it.
ARCNM is bottom-up: every calculation prices the part operation by operation from its geometry and routing, and calibration on your real costs sets the level for a plant or supplier — the number stays explained, line by line.
Material utilisation
Material utilisation is the ratio of the finished part's mass to the stock it is made from — the bar, blank, sheet nest or billet — and the rest is bought, cut away, and often paid for a second time as machining time.
ARCNM prices the material from the stock the part actually consumes — bar, blank or sheet, offcut included — so poor utilisation shows up as a named cost driver.
Workpiece material group (ISO 513)
A workpiece material group is a class of materials that machine alike — the ISO 513 letters P (steel), M (stainless steel), K (cast iron), N (non-ferrous metals and polymers), S (superalloys and titanium) and H (hardened steel), refined by composition and hardness band — so that the same cutting data hold for every grade in it.
ARCNM maps each of its 536 catalogue grades to one of 62 such groups; a material you register yourself joins a group the same way and is priced exactly like a catalogue grade.
Process capability (IT grade)
Process capability is how reliably a machine class holds a tolerance in normal production — statistically the Cp/Cpk index, in practice the finest ISO 286 IT grade, geometric tolerance zone or surface roughness it can hold; a callout tighter than that forces a finer process or a scrap risk.
ARCNM checks every drawing tolerance against what the planned machine class can hold; where a callout is tighter, the routing gains the finer step it needs — grinding, say — and names the callout that caused it.
Manufacturing overhead
Manufacturing overhead is the cost of running the factory that no single part consumes directly — supervision, planning, quality, logistics — allocated to each part as a surcharge on its direct cost.
ARCNM carries overhead as its own line per part, at the rate set in the costing environment, so it never hides inside the machine-hour rate.
DIN 8580 manufacturing processes
DIN 8580 is the German standard that classifies every manufacturing process into six main groups — primary shaping, forming, cutting, joining, coating and changing material properties — each subdivided into groups and subgroups down to the individual process.
Every operation ARCNM costs carries its DIN 8580 code on the routing, so a process plan exported to an ERP or PLM system uses the vocabulary the shop floor already speaks.
Costing environment
A costing environment is one complete set of costing assumptions — fleet, machine-hour rates, labour, material prices, subcontract rates, overhead and calibration — standing for one plant, supplier or region.
In ARCNM a calculation always runs in one environment; the same part across several environments is the basis for make-or-buy, multi-plant sourcing and supplier comparison.
MCP server
An MCP server exposes an application's capabilities to AI assistants through the Model Context Protocol, so an agent in Claude, ChatGPT, Cursor or a custom workflow can call them as typed tools.
ARCNM's MCP server lets an agent explain the cost of a calculation, rank the drivers, optimise the lot size and compare options — the same data as the REST API; billing and credentials stay with a person.