Cost Calculation Model Research Articles

The COST model for calculation of forest operations costs

Since the late nineteenth century when high-cost equipment was introduced into forestry there has been a need to calculate the cost of this equipment in more detail with respect to, for example, cost of ownership, cost per hour of production, and cost per production unit. Machine cost calculations have been made using various standard economic methods, where costs have been subdivided into capital costs and operational costs. Because of differences between methods and between national regulations, mainly regarding tax rules and subsidies, international comparisons of machine costs are difficult. To address this, one of the goals of the European Cooperation in Science and Technology (COST) Action FP0902 was to establish a simple format for transparent cost calculations for machines in the forest biomass procurement chain. A working group constructed a Microsoft Excel–based spreadsheet model which is easy to understand and use. Input parameters are easy to obtain or possible to estimate by provided rules of thumb. The model gives users a simultaneous view of the input parameters and the resulting cost outputs. This technical note presents the model, explains how the calculations are made, and provides future users with a guide on how to use the model. Prospective users can view the model in the Supplementary Material linked to this article online.

Cost calculation model for a tank battalion fielded in an offensive operation

Armored units, since their introduction, and especially after World War II, represent the main maneuver and attack power of modern armies due to their main characteristics (armor protections, mobility, and fire power). In some armies, only the units equipped with tanks are considered as armored units, but in some armies they include also the units equipped with armored personnel carriers and mechanized infantry combat vehicles. In modern armies, infantry units are largely equipped with infantry fighting vehicles, mainly wheeled ones. In the Serbian Armed Forces, armored units consist of tank and mechanized battalions included in the Army brigades. Tank and mechanized battalions are equipped with tanks and infantry fighting vehicles. They represent main attack power of the brigade and they conduct armored, antiarmor, anti-artillery and anti-rocket actions in combat operations. Regardless of the organizational-formation structure, fielding even the smallest tank battalion in different operations is very expensive due to the use of their heavy weapons and high consumption of fuel and ammunition. The paper describes the most important parameters required to calculate costs of the tank battalion involvement in an offensive operation (without attached units, without calculation of the fire support provided by artillery and air force units, and focusing on the operation execution phase), such as personnel, command, movement and maneuver, weapons and ammunition, service support and force protection. The final part of the paper offers a possible cost calculation model for the use of a tank battalion in an offensive operation by parameters, taking into account the factors that define it more closely. Due to the scope of the paper, it is impossible to fully describe the impact of operational environment and the operational model on the cost, because it would have to be the subject of further scientific analysis and a paper of larger scope. The cost calculation model offered might also be applied to other types of battalions, with the respective factors being changed by parameters.

Applying Activity-based Costing at Logistics Service Providers

Logistics service providers run business under a considerable pressure. They have to provide high quality logistics services at lowest possible prices and at the same time have to ensure a sustainable, profitable operation. This kind of business management requires reliable and true information about service costs. Distortions of costing information shall be minimised and the drivers of costs shall be accurately explored. Activity-based costing with methodological and industry specific adaptations may be used to improve the accuracy of logistics service providers’ costing procedures. Additionally, it can deliver information on cost efficiency as well. Thus this paper aims to analyse the applicability of activity-based costing for the case of logistics service providers. A specialised cost calculation model is elaborated and tested under real-world circumstances. The functionality of the model is illustrated by pilot calculations. This shows that significant differences might exist between the results of activity-based costing and the outcomes of traditional costing. The significance of differences is in line with the complexity and heterogeneity of logistics services.

Cost calculation model for the preparation of the Serbian Armed Forces' declared units to contribute to multinational operations

Peacekeeping operations have an irreplaceable role in establishing, building and maintaining peace in crisis-struck regions worldwide. The operations are conducted according to pre-developed plans and predefined models of use, which are made separately for each mission. The countries contributing their forces to peacekeeping operations deploy personnel, technical resources, special-use assets, and, when necessary, specialized personnel for which some compensation can be obtained. According to the above, the paper presents a model of calculating the costs of preparation of the Serbian Armed Forces' declared units to contribute to peacekeeping operations.

Cost calculation model for a combat operation of the Serbian Armed Forces

Successful countering of modern challenges, risks and threats requires making optimal decisions about how to use the forces, often during combat operations, to accomplish the assigned missions and tasks. Optimality is reflected in maximum rationalization of the operation costs, or in the selection of the mode of performing the operation, which will contribute to successful implementation of the mission at the least cost possible. Limited and, as a rule, insufficient funds impose a continuing need for costeffective, rational and efficient use of the funds available. Therefore, the place and role of the cost of operations in the decision-making process in peace and in wartime, should be given special importance, especially bearing in mind that the costs are one of the most important economic categories. The methodology of calculating the cost of a military operation varies depending on the economic systems of the countries that perform the operation, their level of development, the type of operation, etc. Its cost price depends on several elements: the objective of the operation, type, duration, resources required for the achievement of the objective, etc. The regulations, under which the material and financial operations are performed in peacetime, provide their performance in wartime as well, but with necessary adjustment to specific war situation. This applies to all government institutions and the economy of Serbia, and hence to the defense system as well. The defense spending is planned in peacetime, according to the approved procedure. Pursuant to the above, operations planning from the viewpoint of expenditures and costs should be done in compliance with the regulations under which material and financial operations are carried out in peacetime. The paper aims to present the way to determine the cost of a combat operation in terms of making optimal decision, which ensures the accomplishment of the task of using the forces in an operation at optimal cost. The cost price of a combat operation refers to the consumption of human and material resources. The implementation of activities aimed at effective provision, deployment and use of human and material resources creates a precondition for achieving the objectives of the operation.

Cost calculation model for operational capabilities at the multinational operations execution stage

The paper presents a model of operational capabilities cost calculation at the stage of operation execution, using example of the operational capabilities of forces in multinational operations, which can help calculate the financial resources required. Taking into consideration the standards and conditions of mission performance of the Serbian Armed Forces in multinational operations, as well as the resources required for maintenance and use of operational capabilities, the model enables an estimate of capability costs, and hence an estimate of the operation costs. Capability costs are viewed in terms of human resources, weapons and military equipment, and infrastructure. The presented model, with modifications and adjustments, may be applied for the operational cost calculation for all types of operations, but also for the calculation of the capability development cost and an estimate of long-term defense spending. As such, the model may be used in planning the development and in planning the use of forces. A problem occurring in the input data collection phase, referring to the accuracy of the data, may be identified as a disadvantage of the model.

Sustainable Use of Regional Wood Biomass in Kushida River Basin, Japan

The amount and cost of wood biomass produced from the Kushida River basin in Japan were simulated under current and modified forestry scenarios by combining the forest ecosystem and cost calculation models at semi-compartment level; in addition, an analysis was carried out comparing the sustainable supply against heat demands in the basin. The forest ecosystem model (BGC-ES) simulates biomass growth, the effects of thinning and clear-cutting practices, and the amount of harvest from these practices. The cost calculation model estimates the cost of each stage of wood biomass production, which depends on the productivity of forestry machines and the forest location. The available amount was determined by an economic comparison between the energy density of wood chips and fossil fuel. The available wood chips were assumed to be converted to heat at a boiler plant. The current forestry scenario (thinning schedule, rotation length, and managed area) was not efficient for the production of wood chips. The economic available amount was <1 % of the potential production from the basin forests. Modified scenarios (arranging the thinning schedule to promote secondary growth, increasing the rotation length, and increasing the managed area) improved the economic availability of the basin forest (up to about 40 %). In these scenarios, the available amount indicated that saturation was determined by the maximum cost of the wood chips. The available amount of wood chip production that can be sustainably supplied by the basin forest was simulated and compared with the household and agricultural demands for heat in the basin.

Budget-impact model for colonoscopy cost calculation and comparison between 2 litre PEG+ASC and sodium picosulphate with magnesium citrate or sodium phosphate oral bowel cleansing agents

Objective:With the availability of several bowel cleansing agents, physicians and hospitals performing colonoscopies will often base their choice of cleansing agent purely on acquisition cost. Therefore, an easy to use budget impact model has been developed and established as a tool to compare total colon preparation costs between different established bowel cleansing agents.Methods:The model was programmed in Excel and designed as a questionnaire evaluating information on treatment costs for a range of established bowel cleansing products. The sum of costs is based on National Health Service reference costs for bowel cleansing products. Estimations are made for savings achievable when using a 2-litre polyethylene glycol with ascorbate components solution (PEG + ASC) in place of other bowel cleansing solutions. Test data were entered into the model to confirm validity and sensitivity. The model was then applied to a set of audit cost data from a major hospital colonoscopy unit in the UK.Results:Descriptive analysis of the test data showed that the main cost drivers in the colonoscopy process are the procedure costs and costs for bed days rather than drug acquisition costs, irrespective of the cleansing agent. Audit data from a colonoscopy unit in the UK confirmed the finding with a saving of £107,000 per year in favour of PEG + ASC when compared to sodium picosulphate with magnesium citrate solution (NaPic + MgCit). For every patient group the model calculated overall cost savings. This was irrespective of the higher drug expenditure associated with the use of PEG + ASC for bowel preparation. Savings were mainly realized through reduced costs for repeat colonoscopy procedures and associated costs, such as inpatient length of stay.Conclusions:The budget impact model demonstrated that the primary cost driver was the procedure cost for colonoscopy. Savings can be realized through the use of PEG + ASC despite higher drug acquisition costs relative to the comparator products. From a global hospital funding perspective, the acquisition costs of bowel preparations should not be used as the primary reason to select the preferred treatment agent, but should be part of the consideration, with an emphasis on the clinical outcome.

Research on the Multi-Index Comprehensive Evaluation Method of Electromechanical Products’ Disassembly

Considering that the disassembly performance of electromechanical products is determined by multi factors, the multi-index comprehensive evaluation method research is carried out to solve the complex problem of disassembly analysis. The theoretical minimum parts number discrimination model, the disassembly time classification model and the disassembly cost calculation model are proposed in this paper. A comprehensive evaluation system for disassembly is constructed and the evaluation process is established at the angle of evaluation tools developing. Finally, a flywheel institution is evaluated by using the proposed method and the feasibility and practicality of this method is verified.

Rail infrastructure costing based on multi-level full cost allocation

Due to charging issues costs of rail infrastructure use shall be determined as exactly as possible. At the same time rail infrastructure management is a very complex system characterised by a high ratio of indirect costs. There are several costing methods used in transport and logistics but none of them gives a transparent and traceable solution for allocating indirect costs. That is why the paper aims to elaborate a transport cost calculation model adopting and utilising the multi-level full cost allocation method. The developed model and the calculation process are specified for rail infrastructure management. The new cost calculation system delivers more reliable and accurate cost data of elementary rail infrastructure services by allocating indirect costs on a cause-effect basis. At the same time additional resources may be needed for the implementation of the model. Nevertheless, as rail infrastructure manager companies request more exact cost data they should consider the implementation of the proposed costing model.

A cost calculation model for the optimal design of size ranges

A model to identify the optimal, i.e. cost-minimal, design of a size range is presented for the first time. The model is based on cost growth laws, which allow the derivation of the costs of follow-up drafts based on the known costs of the basic draft. The modelling focuses in the first step on the optimal design of the size range in dependency on the number of step sizes. The approach is then extended to the trade-off between a reduction of production costs and necessary development costs for the improvement of the basic draft. This extension allows the identification of the optimal design of a size range in dependency on the number of step sizes and on development costs. The main finding of the paper is that besides these parameters the learning rate of the production and the efficiency of the design improvement process have the greatest influence on the cost minimal design of the size range.

A model for cost calculation and management in a multiproduct agricultural framework. The case for ornamental plants

The business dynamics of the agricultural sector generally call for a system of calculation and cost management that goes beyond output assessment and profit determination, and coordinates a tool that supports the decision-making process, thus facilitating the evaluation of different cultivation techniques, varieties and so on. Accordingly, this paper proposes using a cost model based on activities for calculating and managing production costs in multiproduct firms in the agricultural sector, using ornamental plant cultivation as a case in point. This particular case may be considered extremely difficult in terms of crop variety and likely destinations for the products (commercialization, self-supply, etc.). Consequently, the proposed model is transparent, flexible, simple to apply and understand, and easily adaptable to the peculiarities of firms in the agricultural sector in general.

ADHD from a socio‐economic perspective

Attention deficit hyperactivity disorder (ADHD) and related disorders affect children's ability to function in school and other environments. Awareness has increased in recent years that the same problems often persist in adulthood. Based on previous studies, we aimed to outline and discuss a descriptive model for calculation of the societal costs associated with ADHD and related disorders. Following a literature review including childhood and adult studies, long-term outcomes of ADHD and associated societal costs were outlined in a simple model. The literature concerning long-term consequences of ADHD and related disorders is scarce. There is some evidence regarding educational level, psychosocial problems, substance abuse, psychiatric problems and risky behaviour. The problems are likely to affect employment status, healthcare consumption, traffic and other accidents and criminality. A proposed model structure includes persisting problems in adulthood, possible undesirable outcomes (and their probabilities) and (lifetime) costs associated with these outcomes. Existing literature supports the conclusion that ADHD and related disorders are associated with a considerable societal burden. To estimate that burden with any accuracy, more detailed long-term data are needed.

An Analysis of Cost and Profit of a Nursing Unit using Performance-Based Costing: Case of a General Surgical Ward in a General Hospital

The aim of this study was to analyze net income of a surgical nursing ward in a general hospital. Data collection and analysis was conducted using a performance-based costing and activity-based costing method. Direct nursing activities in the surgical ward were 68, indirect nursing activities were 10. The total cost volume of the surgical ward was calculated at won 119,913,334.5. The cost volume of the allocated medical department was won 91,588,200.3, and the ward consumed cost was won 28,325,134.2. The revenue of the surgical nursing ward was won 33,269,925.0. The expense of a surgical nursing ward was 28,325,134.2. Therefore, the net income of a surgical nursing ward was won 4,944,790.8. We suggest that to develop a more refined nursing cost calculation model, a standard nursing cost calculation system needs to be developed.

A cost calculation model for specialist palliative care for patients with non-small cell lung cancer in a tertiary centre

Five-year survival of patients with non-small cell lung cancer (NSCLC) is below 15%. Therefore, an early integration of palliative care according to the 2002 WHO definition is indispensable. In this paper, we describe methodical and financial aspects of prospective pricing of palliative care within a concept of integrated care for patients with NSCLC in Germany. Four structures of palliative care services were defined (hospital support, home care, day care and in-patient care). Prospectively, resource use was estimated, using real cost data from the finance department of the University Hospital. Resource use was forecasted on the basis of operating experience, data of the national core documentation of palliative care patients and recommendations from the European Commission. Expected average hospital support team services were priced at 483 euros and budgeted for 10% (stage 1) to 90% (stage 4) of patients. Home care (60 visits, 4,573 euros) and day-care (5 visits) services were budgeted for between 5% (stage 1) and 30% (stage 4). The resulting prospective reimbursements range from 393 euros (stage 1) to 2,503 euros (stage 4). In-patient care was excluded from the prospective payments and reimbursed separately. For the first time, global reimbursements covering palliative care hospital support, home care and day care for patients with NSCLC were prospectively calculated and successfully negotiated. The contractual specification of palliative care services may contribute to transparency and quality in cancer care.

Cancer in the oropharynx: Cost calculation of different treatment modalities for controlled primaries, relapses and grade III/IV complications

Background and purpose This paper presents a model for cost calculation using the different treatment modalities for oropharyngeal (OPh) cancers used in our hospital. We compared full hospital costs, the associated costs of localregional relapses (LRR) and/or treatment related grade III/IV complications. Materials and methods Patients with OPh cancer are treated in the Erasmus MC preferably by an organ function preservation protocol. That is, by external beam radiation therapy (EBRT) followed by a brachytherapy (BT) boost, and neck dissection in case of N+ disease (BT-group: 157 patients). If BT is not feasible, resection with postoperative EBRT (S-group [S=Surgery]: 110 patients) or EBRT-alone (EBRT-group: 77 patients) is being pursued. Actuarial localregional control (LRC), disease free survival (DFS) and overall survival (OS) at 5-years were calculated according to the Kaplan–Meier method. The mean costs per treatment group for diagnosis, primary Tx per se, follow-up, (salvage of) locoregional relapse (LRR), distant metastasis (DM), and/or grade III/IV complications needing clinical admission, were computed. Results For the BT-, S-, or EBRT treatment groups, LRC rates at 5-years were 85, 82, and 55%, for the DFS, 61, 48, and 43%, and for the OS 65, 52, and 40%, respectively. The mean costs of primary Tx in case of the BT-group is €13,466; for the S-group €24,219, and €12,502 for the EBRT-group. The mean costs of S (the main salvage modality) for a LRR of the BT group or EBRT-group, were €17,861 and €15,887, respectively. The mean costs of clinical management of Grade III/IV complications were €7184 (BT-group), €16,675 (S-group) and €6437 (EBRT-group). Conclusion The clinical outcome illustrates excellent LRC rates at 5-years for BT (85%), as well as for S (82%). The relatively low 55% LRC rate at 5-years for EBRT probably reflects a negative selection of patients. It is of interest that the total mean costs of patients alive with no evidence of disease is least for the BT-group: €15,101 as opposed to €25,288 (S) and €18,674 (EBRT). Main underlying cause for the high costs with S as opposed to RT alone is the number of associated clinical admission days, not only during primary treatment, but also at relapse. This might be taken into consideration when treating these patients.

A methodology to evaluate differential costs of full field digital as compared to conventional screen film mammography in a clinical setting

Purpose The use of full field digital mammography (FFDM) in alternative to conventional screen film mammography (SFM) in the current practice is delayed by the high costs of FFDM. The present study, performed at the Centro per lo Studio e la Prevenzione Oncologica of Florence, using both FFDM and SFM, was aimed at estimating the impact of introducing the new FFDM technique on overall mammography costs. Material and methods We estimated the differential costs of both methods, based on real expenditures, as provided by the administrative department, and on radiologists, radiographers and other staff's working time. Two different workload scenarios (5000 and 10,000 tests/year per mammography equipment) were considered. Common costs of both techniques were censored for study purpose. Results Beside a higher cost due to purchase and hire/leasing costs of equipment, FFDM implies a greater workload for radiologists (reading time almost doubled). SFM implies a greater workload for the administrative staff to run the archive and for loading/unloading films of the roller viewer, whereas no different workload has been observed for radiographers. Overall FFDM costs €24.22–26.46 for examination more than SFM for the 5000 tests scenario and €9.91–12.15 more for the 10,000 tests scenario. Discussion Although present study estimates cannot easily be generalised to any local setting, the model for cost calculation is easy to be exported to another scenario by applying different local parameters. The advantages made available by FFDM (computerised data recording, tele-transmission, tele-reporting, tele-consulting, automatic display on monitor of previous exams and use of CAD) may justify the higher cost, but a limited reduction in purchase and assistance costs could easily allow a turnover, with FFDM being more convenient than SFM even on the cost side.

Societal cost of workplace homicides in the United States, 1992-2001

The Census of Fatal Occupational Injuries (CFOI) reported 8,672 workplace homicide victims between 1992 and 2001. Although rarely calculated, cost estimates are important for prevention and research efforts. Societal costs were estimated using the cost-of-illness approach applied to CFOI data. The cost calculation model incorporated medical expenses, future earnings summed from the year of death until the year the decedent would have been 67, and household production losses (includes activities such as child care and housework). Workplace homicide had a total cost of nearly 6.5 billion dollars and a mean cost of 800,000 dollars between 1992 and 2001. The retail trade industry division had the highest number of homicides and total cost, 2.1 billion dollars, for males and 556,000 dollars for females. Estimates of the cost of work-related homicides can be used to improve occupational injury prevention and control program planning, policy analysis, evaluation of safety and health interventions, and advocacy for a safer work environment.

Activity-based costing: a practical model for cost calculation in radiotherapy

Purpose The activity-based costing method was used to compute radiotherapy costs. This report describes the model developed, the calculated costs, and possible applications for the Leuven radiotherapy department. Methods and materials Activity-based costing is an advanced cost calculation technique that allocates resource costs to products based on activity consumption. In the Leuven model, a complex allocation principle with a large diversity of cost drivers was avoided by introducing an extra allocation step between activity groups and activities. A straightforward principle of time consumption, weighed by some factors of treatment complexity, was used. The model was developed in an iterative way, progressively defining the constituting components (costs, activities, products, and cost drivers). Results Radiotherapy costs are predominantly determined by personnel and equipment cost. Treatment-related activities consume the greatest proportion of the resource costs, with treatment delivery the most important component. This translates into products that have a prolonged total or daily treatment time being the most costly. The model was also used to illustrate the impact of changes in resource costs and in practice patterns. Conclusion The presented activity-based costing model is a practical tool to evaluate the actual cost structure of a radiotherapy department and to evaluate possible resource or practice changes.

Recent and future trends in cost estimation

Increasingly keen competition and the demand for shorter times to market are driving innovative approaches within the product creation process. When considering the factors that decide the success of a product in the market today, it becomes clear that cost is as crucial as quality and functionality. This paper gives an overview of the state of the art and future trends in the field of cost estimation. First, a short overview of the relevant terms from the field of cost accounting is given. The impact of product development on costs is elaborated and the requirements for a cost calculation model are outlined. The currently prevailing methodological approaches for cost estimation in the product development process are set out and classified in the scientific context with a schema being introduced to reduce the vast number of methods to a single basic structure. Finally, various methods for cost estimation are set out and their shortcomings summarized. This paper aims at building a foundation for future research in the field of cost estimation and ends with a look at future work.