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The allocation of shared fixed costs

Williams, H. Paul and Butler, Martin (2006) The allocation of shared fixed costs. European Journal of Operational Research, 170 (2). pp. 391-397. ISSN 0377-2217

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Identification Number: 10.1016/j.ejor.2004.07.046


We consider the problem of sharing the fixed costs of facilities among a number of users. Typically the users have a benefit or revenue from the use of the facilities. Although the problem can be formulated and solved as an integer programme this provides limited accounting information. Such information is often needed in order to (i) decide on which facilities are viable and (ii) to charge the users. It is shown that it is impossible to meet both these needs in a satisfactory way. We examine different ways of partially meeting them. In addition, we consider the issue of fairness among different possible cost allocations and how such ‘fair’ costs may be derived.

Item Type: Article
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Additional Information: © 2006 Elsevier.
Divisions: LSE
Subjects: Q Science > QA Mathematics
Sets: Research centres and groups > Management Science Group
Research centres and groups > Computational, Discrete and Applicable Mathematics@LSE (CDAM)
Date Deposited: 22 May 2007
Last Modified: 20 Jan 2020 03:22

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