Effective cost modelling is a process that helps in understanding the cost structure of a product or service. It involves:
Data gathering:Collecting relevant data related to materials, labor, overheads, and other cost drivers.
Analysis of facts:Evaluating the collected data to understand cost behaviors and identify areas for cost reduction.
Supplier negotiation and issuing a request for quotation are subsequent steps that may utilize the insights gained from cost modelling but are not part of the modelling process itself.
[Reference:, CIPS L4M6 Study Guide, , , ]
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