Opportunity cost is a central concept in decision making. It is difficult to measure because it is the value associated with opportunities foregone. In this paper, we characterize three time-based dimensions of resources to help understand and estimate opportunity costs. These dimensions capture...

We extend Fisher, Peffer, and Sprinkle (2003) to investigate the effectiveness of a budget-based incentive contract to settings with alternate task characteristics. We first replicate their finding: when groups perform a task with an additive production function, a budget-based contract leads to...

Many accounting textbooks state that the opportunity cost of idle fixed assets is zero. A few exceptions refer to repair, overhaul, employee vacation and congestion, giving rise to positive opportunity cost. We show that in important and frequently encountered situations, idled assets have...

We examine the value of assigning costs of capacity resources to products for capacity planning. It is often argued that a product's full cost, which includes such assignments, is a measure of its long-run manufacturing cost. Hence, full cost is viewed as an appropriate basis for deciding...

We examine variations in the relation between a hospital's level of service capability and the operating costs of its departments and activities (e.g., surgery, laboratory, laundry). We propose a model of the hospital as a set of concentric, interrelated services organized around a core mission...

Using theoretical analysis and simulation experiments, we examine the usefulness of full costs for product pricing. We show that full costs are economically sufficient for pricing when a decision-maker (DM) jointly solves the capacity planning and pricing problems, and has enough discretion in...

We demonstrate the need to view in a dynamic context any decision based on limited information. We focus on the use of product costs in selecting the product portfolio. We show how ex post data regarding the actual costs from implementing the decision leads to updating of product cost estimates...

Using data from Ontario hospitals, we investigate the conjecture that the stickiness of costs would be greater for functions that relate to an organization's core competency. We find operating costs for the hospital as a whole are sticky. Moreover, we find higher stickiness in costs pertaining...