How are tool wear costs in machining accounted for in DFM Concurrent Costing?

The cost of a machining process, per part, can be broken down into two categories. The first category is the direct cost of machining and includes the cost per part of labor and machine use. This direct cost, per part, decreases as parts are machined more quickly because more parts are being made per unit time. The second category of machining cost is tool replacement cost and includes the cost of tool replacement labor, machine downtime, and tool amortization. This tool replacement cost, per part, increases as parts are machined more quickly because tool life is decreased at elevated machining speeds. Notice that the first category of machining cost decreases with machining speed and the second category increases with machining speed. This implies that a minimum part cost exists when the direct costs equal the tool replacement costs. The machining software utilizes this fact to account for tool wear costs by calculating the direct costs and multiplying by a factor. This factor varies and depends on the cutting conditions for a particular process. If the optimal, minimum cost, cutting conditions can be achieved in a particular process, this factor is equal to two.