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OPTIMAL ALLOCATIONS OF JOINT (COMMON) COSTS: A PARAMETRIC PROGRAMMING APPROACH
Author(s) -
Jensen Robert E.
Publication year - 1978
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1978.tb00733.x
Subject(s) - computer science , operations research , joint (building) , parametric statistics , mathematical optimization , ranking (information retrieval) , cost allocation , separable space , parametric programming , economics , mathematics , engineering , artificial intelligence , architectural engineering , mathematical analysis , statistics , accounting
A parametric programming model for allocating joint costs is described and illustrated. Given M mutually exclusive missions and P alternative systems for accomplishing such missions, the model first determines the optimal choice of systems for all missions simultaneously. It then allocates both joint and separable costs such that no mission receives a greater cost allocation than any other mission alternative that might be suboptimal for the mission but nonoptimal when all missions are simultaneously considered. Although the model initially assumes a mission priority ranking, this assumption is relaxed later on as alternative rankings are evaluated and cost allocation ranges under all priority rankings are evaluated.