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Cost Model

What is the Cost Model?  

The Should Cost Model is a powerful feature designed to reflect how the cost of a product is formed based on the components it comprises. By leveraging real, data-based insights, this tool supports users in price forecasting, market analysis, risk mitigation, and strategic decision-making.    

Main Functions and Summary  

The Cost Model on PINPOOLS serves as a central, automated system that enables:  

  • Value chain management  
  • Linking indices with benchmarks  
  • Clear understanding of cost drivers  
  • Price tracking over time  
  • Accurate price forecasting  
  • Improved market visibility and understanding  
 

This feature empowers users with all the essential tools to make informed, data-driven decisions.  

  

Setting Up a Cost Model  

 1 

To set up a Cost Model, follow these steps:  

1. Navigate to the "Cost Model" tab on the left-side menu.  

2. Click "+ Set up Model" to begin.  

On this page, you'll also see a list of Sample Models and previously created models. You can customize your view by adjusting column visibility, column order, and using filters to simplify the search.  

Model Setup Options  

After clicking "+ Set up Model", the system will prompt you to:  

  • Name your model  
  • Select a calculation type:  
  • Absolute Volume (unit-based)  
  • Relative (percentage-based)  
  • Choose a currency  

 

Adding a Final Item
 
2 

Click "+ Add final item" to define the main product:  

  • Item Name (required)  
  • Unit of Measure (required)  
  • Short Description  

Click “Add final item” to proceed to the main model structure page.  

Available Actions:  

  • Plus icon – add child items  
  • Pencil icon – edit item  
  • Bin icon – delete item  
  • You can save a model at this stage or remove it if needed  

  

Adding Child Items  

 3
 
To complete the model, you need to add components (child items). There are three options:  

  1. PINPOOLS Benchmarks  
    Choose from a dropdown of real transaction-based benchmarks on the platform.  
  1. Commodity Indices  
    Access a dropdown of available indices.  
  1. Custom Item  
    Enter the Price per Unit and Unit of Measure.  
     
     

After choosing a child item, define its percentage or absolute volume within the model.  

Next, select whether to calculate the cost based on:  

  • Products earlier in the value chain, or  
  • Prices from benchmarks/indices  
     
     

Finally, select region and country for AI data and provide a short description.  

Once all child items are added, the model structure will display the final item and all its connected components.  

Each child item window includes:  

  • Price Forecast  
  • Item Name  
  • Price per Unit  
  • Region for AI Data  
  • Child Item Type  
  • Calculation Type  
  • Icons for editing, deleting, or adding more components  

 

 

Cost Model Analysis  

After saving the model, the following tabs become available for deeper insights: 

  1. Model
  • Left panel: List of final and child items (connected items marked with a blue icon).  
  • Right panel: Price graph for the final item and selected components over time (1 month, 3 months, 6 months, etc.)  
  • Price Forecast is shown after the "Current time" line.  
  • Use the button in the top-right corner for additional chart actions.  
  • Toggle graph visibility by clicking on item names under the chart.  

 

      2.     Model Components

  • Left side: Historical Price Structure graph (select period and calculation type).  
  • Right side: Pie chart showing cost structure based on the composition and quantity of each component.  

 

      3.     Model Structure

At the top: Total cost of the model in the selected currency and calculation type.  
Final item appears in a red section, including:  
  • Name  
  • Unit of Measure  
  • Price  
  • 3-month and 6-month forecasts  
  • Description  

Child items are displayed in individual sections with:  

  • Price Forecast  
  • Item Name  
  • Price per Unit  
  • Region for AI Data  
  • Item Type  
  • Calculation Type  

   

    4.      Forecast

This tab provides predicted cost data for the full model and individual components, with:  

  • 3-month and 6-month forecasts  
  • Data source specified  

 

     5.     Forecast Accuracy

Here you’ll find forecast accuracy rates expressed as percentages.  
A 100% score indicates a perfectly accurate forecast.  
This helps users assess the reliability of predictions.  
 

     6.     Latest News

This section provides relevant news updates on Cost Model elements, including:  

  • Geolocation  
  • Date  
  • Summary and details  
  • Reactions and conclusions  
  • Force majeure or plant shutdowns  
  • Data source URL  

  

Modelling Adjustments  

On the Modelling tab, users can manipulate index values to simulate cost changes.  
These adjustments can be saved to compare outcomes and evaluate potential market scenarios.  

 

Conclusion  

The Cost Model on PINPOOLS is a robust, data-powered tool tailored for professionals who need precision, transparency, and insight into price dynamics.  
From raw material tracking to strategic cost forecasting, it streamlines complex analysis into one comprehensive feature—empowering smarter business decisions every step of the way.