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Cost Allocation with Limited Information

Author

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  • Jens Leth Hougaard

    (Department of Food and Resource Economics, University of Copenhagen)

  • Jørgen Tind

    (Department of Mathematical Sciences, University of Copenhagen)

Abstract

This article investigates progressive development of Aumann-Shapley cost allocation in a multilevel organizational or production structure. In particular, we study a linear parametric programming setup utilizing the Dantzig-Wolfe decomposition procedure. Typically cost allocation takes place after all activities have been performed, for example by finishing all outputs. Here the allocation is made progressively with suggestions for activities. I other words cost allocation is performed in parallel for example with a production planning process. This development does not require detailed information about some technical constraints in order to make the cost allocation.

Suggested Citation

  • Jens Leth Hougaard & Jørgen Tind, 2013. "Cost Allocation with Limited Information," MSAP Working Paper Series 01_2013, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:msapwp:01_2013
    as

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    File URL: http://okonomi.foi.dk/workingpapers/MSAPpdf/MSAP2013/MSAP_WP01_2013.pdf
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    References listed on IDEAS

    as
    1. Hougaard, Jens Leth & Tind, Jørgen, 2009. "Cost allocation and convex data envelopment," European Journal of Operational Research, Elsevier, vol. 194(3), pages 939-947, May.
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    Keywords

    cost allocation; Aumann-Shapley prices; decomposition; parametric programming;
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