iSixSigma

Cost Model

Definition of Cost Model:

In order to calculate the costs of providing service it is necessary to design and build a framework in which all costs can be recorded and allocated or apportioned to specific customers or other activities.

Such cost models can be developed to show, for example, the cost of each service, the cost for each customer or the cost for each location.

The usual start point is to develop a cost-by-customer cost model.

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