 A contribution to the linear programming approach to joint cost allocation: Methodology and applicationAlireza Tehrani Nejad Moghaddam and Christian Michelot European Journal of Operational Research, 2009, vol. 197, issue 3, 999-1011 Abstract: The linear programming (LP) approach has been commonly proposed for joint cost allocation purposes. Within a LP framework, the allocation rules are based on a marginal analysis. Unfortunately, the additivity property which is required to completely allocate joint costs fails in presence of capacity, institutional or environmental constraints. In this paper, we first illustrate that the non allocated part can be interpreted as a type of producer's surplus. Then, by using the information contained in the Simplex tableau we propose an original two-stage methodology based on the marginal costs and the production elasticity of input factors to achieve an additive cost allocation pattern. The distinguished feature of our approach is that it requires no more information or iterative computations than what is provided by the final Simplex tableau. A real-type refinery case study is provided. Keywords: Linear; programming; Joint; cost; allocation; Additivity; Dual; variables; Simplex; method (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:197:y:2009:i:3:p:999-1011 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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