cost function

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A mathematical formula used to predict the cost associated with a certain action or a certain level of output. Businesses use cost functions to forecast the expenses associated with production, in order to determine what pricing strategies to use in order to achieve desired profit margins.

Use 'cost function' in a Sentence

When making business decisions, it is best to evaluate a proper cost function of a new investment to see how long it will take to make a profit off of the purchase.
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The cost function produced by their analyst stated that as long as they were able to maintain a booking rate over sixty percent that the investment in a new hotel would be profitable.
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When he ran the cost function for the production of the new line of windbreakers, he knew that the company would need to charge at least ten dollars more than the previous version in order to maintain a healthy profit margin.
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