Abstract

In the presented paper we develop model of apportionment of cost generated by variability and mean value of flows from (to) shared services centre. It can be either cash pool or distribution centre, or even some kind of customer service centre. The apportionment formula for the cost of capacity generated by flow variability turns out to be regression coefficient of flow to (from) the distribution centre (cash pool) generated by particular company within the multibusiness enterprise as endogenous variable to flow of inventory (cash) for the whole distribution centre (cash pool) as exogenous variable. The cost generated by the flow of requirements (goods, money) itself, i.e. by the mean value of the flow, has to be split between SSC customers according to their share on that flow. Result does not depend on the form of cost function as long as it is strictly increasing function of flow from (into) SSC (orders, stock, cash) and of mean of that flow.

Highlights

  • As far as we know pricing of intra-company or intra-group deliveries is issue having ties with efficient resource allocation, managers’ motivation, and ability to defend the chosen approach against revenue authority

  • As the capacity cost function of services centre (SSC) becomes a part of cost function of each customer, they will by deciding to minimize their cost functions leveloff the cost of their own capacity, inability to serve customer, transaction cost and the cost borne by SSC

  • In the presented paper we develop model of apportionment of cost generated by variability and mean value of flows from shared services centre

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Summary

Introduction

As far as we know pricing of intra-company or intra-group deliveries is issue having ties with efficient resource allocation, managers’ motivation, and ability to defend the chosen approach against revenue authority. There is a lot of literature regarding the inventory (cash) optimization models, route optimization, batch size optimization, etc., with respect to a very various specification of cost functions, but very little literature, which deals with prices set by centres, which provide these services. These can include delivery costs, customer loss implied cost, as well as storage cost. We develop tiny general model of apportionment of cost generated by creation and maintaining capacity in shared services centre (SSC) in this paper.

Cost of Shared Services Centre
Capacity Cost Model
The notation f
Cost generated by flow
Conclusions and discussion
Sharing Cost of Shared Services Centre
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