Study of cost allocation methods and their applications

Abstract

Problems arise in joint cost allocation in many practical cases when people decide to work together. Application of a suitable cost allocation method may solve the problem and save cost of every participant, In this study, a relevant cost allocation method is formulated, considering system loss and budgetary constraints of the participants. The model has been simulated using randomly generated numbers in order to test for workability of the proposed fonnula Indeed, number of already established methods are in practice to accommodate similar scenario. The model developed by the author may be considered to be an enhancement of all the previous established ones.