Article ID: | iaor20032112 |
Country: | United States |
Volume: | 31 |
Issue: | 4 |
Start Page Number: | 813 |
End Page Number: | 832 |
Publication Date: | Oct 2000 |
Journal: | Decision Sciences |
Authors: | Troutt Marvin D., Zhang Aimao, Gribbin Donald W., Shanker Murali |
Keywords: | programming: integer |
We consider the activity-based costing situation, in which for each of several comparable operational units, multiple cost drivers generate a single cost pool. Our study focuses on published data from a set of property tax collection offices, called rates departments, for the London metropolitan area. We define what may be called benchmark or most efficient costs per unit of driver. A principle of maximum performance efficiency is proposed, and an approach to estimating the benchmark unit costs is derived from this principle. A validation approach for this estimation method is developed in terms of what we call normal-like-or-better performance effectiveness. Application to longitudinal data on a single unit is briefly discussed. We also consider some implications for the more routine case when costs are disaggregated to subpools associated with individual cost drivers.