Semi-variable cost

Abstract: Describes and analyzes all elements of equipment cost and gives a procedure for estimating them

Abstract: The classical economic production lot size (EPL) model assumes a constant production rate that is predetermined and inflexible, and perfect quality. Recent models have removed the assumption of perfect quality while maintaining the inflexible production rate assumption. Production rates in many cases, such as orders filled by a machine, can be changed. Moreover, unit production cost and process quality depend on the production rate. In this paper, we extend the EPL model to cases where the production rate is a decision variable. Unit production cost becomes a function of the production rate. Also, the quality of the production process deteriorates with increased production rate. We solve the proposed model for special cost and quality functions and illustrate the results with a numerical example. The results show that, for cases where increases in the production rate lead to a significant deterioration in quality, the optimal production rate may be smaller than the rate that minimizes unit production cost. For cases where quality is largely independent of the production rate, the optimal production rate may be larger than the rate that minimizes unit production cost.

Abstract: This paper disaggregates aircraft operating costs into various cost categories and provides background for an engineering approach used to compute a generalized aircraft trip cost function. Engineering cost values for specific airplane designs were generated for a broad spread of operating distances, enabling a direct analysis of the operating cost function and avoiding the problems associated with financial reporting practices. The resulting data points were used to calibrate a cost function for aircraft trip expenses as they vary in seating capacity and distance. This formula and the parameter values are then compared to econometric results, based on historical data. Results are intended to be used to adjust reported costs so that conclusions about industry structure based on cost regressions correctly account for differences in stage lengths and capacities. A Cobb–Douglas cost function is also computed, providing elasticity parameters for both economies of density, through seat capacity, and distance as they would be determined from clean airline-neutral data. The results are particularly useful for route network design because they establish a simple planar connection between frequency, capacity and costs. Although the econometric cost functions are no less accurate, it is generally much less convenient for subsequent analysis.

Abstract: 'Narrow' banking proposals would separate insured deposits from most types of bank lending. Using data from large U.S. banks, the authors examine the extent to which narrow banking proposals are likely to result in increased production costs. Production costs will rise for nonjoint provision of deposit and loan services if there are cost complementarities in producing the two outputs jointly or if joint production enables banks to spread their fixed costs more effectively. Unlike standard cost function approaches, the authors' methods allow them to estimate the fixed-cost and cost-complementarity effects separately. They find the net production cost consequences of narrow banking to be negligible. Copyright 1993 by University of Chicago Press.