Cost-Effectiveness Analysis
Cost-effectiveness analysis originated in the defense and space community where it is informally known as “getting the biggest bang for the buck.” Cost-effectiveness analysis shares a lot of the same philosophy and methodology with benefit-cost analysis. There are many similarities in the techniques; cost-effectiveness analysis was derived from benefit-cost analysis.
The three requirements for cost-effectiveness analysis to be used in a decision are as follows:
The problem must be bounded.
There needs to be more than one possible solution to that problem.
The proposals being considered are all valid solutions to that problem.
There are two versions of cost-effectiveness analysis. In the fixed-cost version, you are trying ...
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