Costing models
• If we can only use the costs for comparisons, we
might as well make the calculations as easy as
possible.
• For example, the operating costs in nearby locations
might be virtually the same, so we can remove these
from the equation and concentrate of transport
costs.
• It is difficult to find the exact cost of delivering to any
particular customer, so we can assume that the
transport cost is proportional to the distance moved.