Economics of Electronic Design, Manufacture and Test (PDF)

The general understanding of design is that it should lead to a manufacturable product. Neither the design nor the process of manufacturing is perfect. As a result, the product will be faulty, will require testing and fixing. Where does economics enter this scenario?
Consider the cost of testing and fixing the product. If a manufactured product is grossly faulty, or too many of the products are faulty, the cost of testing and fixing will be high. Suppose we do not like that. We then ask what is the cause of the faulty product. There must be something wrong in the manufacturing process. We trace this cause and fix it. Suppose we fix all possible causes and have no defective products. We would have eliminated the need for testing.
Unfortunately, things are not so perfect. There is a cost involved with finding and eliminating the causes of faults. We thus have two costs: the cost of testing and fixing (we will call it cost-1), and the cost of finding and eliminating causes of faults (call it cost-2). Both costs, in some way, are included in the overall cost of the product. If we try to eliminate cost-1, cost-2 goes up, and vice versa. An economic system of production will minimize the overall cost of the product.
Economics of Electronic Design, Manufacture and Test is a collection of research contributions derived from the Second Workshop on Economics of Design, Manufacture and Test, written for inclusion in this book.