. Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com Copyright © 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website. Modeling for CDMA Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com) Copyright© 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website. Source: CDMA CAPACITY AND QUALITY OPTIMIZATION Chapter Business-Case Models Business-case models are designed to validate investment choices. They model costs per some functional element, such as time or number of subscribers. They allow us to compare alternative systems and determine the cost per functional element for each one, permit- ting us to make the choice most appropriate to the forecast of the demand for services. We can then apply these cost models to our investment through return-on-investment (ROI) models by calculating the expected income in relation to the cost investment. 46.1 Fixed and Variable Costs The cost of something sounds basic and simple, but defining what a component costs as part of a system can be very complicated. There are a lot of different contributions to the cost of a system part-what we pay up front, what we pay over time, and what else we have to pay for. In general, we try to identify linear cost functions, how much something costs per unit. The units may have dimensions of some number of things, some amount of time, or something else. Sometimes we have to use estimation to get a linear function that reflects our cost per unit. 46.1.1 Time Most things we buy have a one-time cost, a purchase price. When we own equipment, the purchase price is usually the largest component of the cost. Even a lease can have a substantial cost at the beginning for equipment we have to buy or for some kind of up-front service, an installation fee. This is consistent with our experience buying and leasing consumer products. If I buy a car, the