An intuitive parametric cost forecasting model for assembled products

The author presents an intuitive justification for a statistical cost estimating model thought to be the basis of a commercially available computer package for predicting the cost of items of hardware. The relationship is applied to cost data on the selling price of standard models of cars available in the United Kingdom. The data are also used to calibrate the proposed model and to identify the order magnitude of an index used in the proposed model to describe the difficulty of manufacture of an article. Estimates produced by the proposed model and those from a proprietary computer package are similar.<>