GMS 803 Lecture Notes - Lecture 11: Price Elasticity Of Demand, Demand Curve, Variable Cost
31 Mar 2016
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Document Summary
Consider the following simpliied example of a private carrier using the formula + x to determine the operating cost of trips over a particular 100-mile lane, where x is the number of units carried in the truck. & the comprises as the set up cost of a trip & as the distance cost based on per mile. o o. How much should each shipper pay under the scenario in q3? o. A sample of allocation schemes: proportional to weight: Shipper b: 0. 6 260=156: proportional to separate cost: Equally allocate common costs plus allocation of separable cost: only shipper a: (160/2)+x=80+40=120, only shipper b: (160/2)+x=80+60=140. Cost of service pricing: charge based on carrier cost. Value of service pricing: charge what it is worth to the shipper. Common costs: costs that are problematic to allocate across multiple outputs that arise from the same process.
