A Commonsense Approach to Cost/Rate Analysis

'the premise of this paper is that cost/production rate analysis is an individualistic issue that demands a determinative, non-statistical treatment, and that cost/rate statistics are certainly not now, and may never be, appropriate to measure the cost/rate effect. BACKGROUND.----_ Cost/rate analysis, one of the two basic analyses that constitute production cost estimating, is receiving more and more high-level attention. Unfortunately, there is widespread misinterpretation, misuse, and superficial treatment of cost/rate methodologies. Some of this arises from analysts selecting from the methodologies available without recognizing the limited range of applicability or the fact that some are underdeveloped or unverified theories. Realizing this and faced with his own specific need for a valid methodology,- the author developed a new determinative, nonstatistical equation and approach to cost/rate analysis. THE PROBLEM----The problem (that obstructs and almost defies a valid methodology) is that the production cost formula is a virtual Rubik's Cube of interdependent and unpredictable factors (e.g., the degree of labor union resistance to labor force cutbacks, resulting from a falling production rate). In addition, the number of factors is perhaps limitless and the values of some seem indeterminable It is no wonder that the problem is difficult to understand and difficult i o measure. The effect of these factors usually creates a confused and disorganized perspective in one's mind. Figure 1 portrays this confusion