In manufacturing industry and NPD, the RM prices keeps fluctuating along with currency fluctuations. So in simple how do we define a cost target so that the external factors like RM price increase, currency fluctuations are taken care. Please advice. Saving Changes...
There are many ways you can cover the uncertainty with respect to price rise or fall.
If this is for a project, probably you can enter into fixed price contract with few suppliers for the particular product/service or result.
Alternatively, if it is a commodity then one can hedge against this commodity by getting futures or other such contract.
Else, if you have the historical data and able to quantify the variation in price, one can run quantitative risk analysis in order to quantify the risk and include in your price.
Else one can also use the combination of the above.
