Jericho Inc. is a large logistics company that focuses on the efficient operations of its warehouses to speed the picking of customer orders for delivery. Through the use of intelligent robots and strategic placement of inventory, Jericho's lead development team has determined the best way to layout its inventory so the amount of movement is limited. As such they have a very good understanding of which costs are variable and which costs are fixed.

Explain which cost estimation method is being used by Jericho.