What is the formula for calculating approximate costs using multiple variables?

In summary, the conversation is about a formula that the person is trying to build to calculate the price of a specific good. The formula involves coefficients and criteria values. The person also mentions having a history of previous purchases and needing help with calculating the coefficients. They suggest using a single variable regression to find a reasonable value for the coefficients.
  • #1
sergey
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Hello!
I have the following formula -
a*k1 + b*k2 + c*k3 = P
This is a formula I'm trying to build. It will be used to calculate price of a specific good (P) according to criterions k1,k2,k3. Every k have its own value, that's why its being multiplied by coefficients a,b and c.
I have a history of many previous purchases where k1,k2,k3 and P are known and i need to approximately calculate a,b and c according to this.

Hope i explained this well.
Can someone help me with this?
 
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  • #2
Just an idea:

[tex]P[/tex] is a function of [tex]k_1, k_2,[/tex] and [tex]k_3.[/tex]
So the multivariable formula is in the form [tex]P(k_1, k_2, k_3) = ak_1 + bk_2 + ck_3[/tex].

If you have many values of [tex]P[/tex] and [tex]k[/tex] in the formula [tex]P(k) = ak[/tex], you would run a single variable regression on the data to find a reasonable value of [tex]a[/tex]. Thus far, I am not fluent in multivariable regression, so here is a http://www.nd.com/NSBook/NEURAL%20AND%20ADAPTIVE%20SYSTEMS17_Regression_for_Multiple_Varia.html" that might help.
 
Last edited by a moderator:

1. What is approximate cost calculation?

Approximate cost calculation is a process used to estimate the cost of a project, product, or service. It involves analyzing various factors such as materials, labor, and overhead costs to come up with an estimated cost for a project.

2. Why is approximate cost calculation important?

Approximate cost calculation is important because it helps individuals and businesses make informed decisions about their projects. It allows them to plan and budget accordingly and avoid unexpected costs that could impact the success of their project.

3. How accurate is approximate cost calculation?

The accuracy of approximate cost calculation can vary depending on the complexity of the project and the available data. However, it is typically within a reasonable range and can be used as a guide for budgeting purposes.

4. What are the limitations of approximate cost calculation?

One limitation of approximate cost calculation is that it is based on estimates and assumptions, so the actual cost may differ from the calculated cost. Additionally, unforeseen circumstances or changes in market conditions can also impact the accuracy of the calculation.

5. How can I improve the accuracy of approximate cost calculation?

To improve the accuracy of approximate cost calculation, it is important to gather as much data and information as possible. This may include obtaining quotes from suppliers, researching market trends, and consulting with experts in the field. It is also important to regularly review and update the calculations as the project progresses.

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