CHAPTER 4

Other Internal Cost Models

There are other types of internal cost models in addition to those discussed in chapter 3 that address the question of what should a product or service cost to produce internally. This chapter discusses four of these models: simple and stepped breakeven point models, make-or-buy decision models, crossover charts, and cost-of-quality models. The output from these models used singly or in combination can provide information that can significantly improve the quality of decisions relating to new product and service introduction, outsourcing, process selection, procurement, and overall cost management.

Breakeven Models

Breakeven cost models focus on the price and cost of goods sold (COGS) portions of the general ...

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