Using activity-based costing and simulation to reduce cost at a police communications centre

Abstract

1Using activity based costing and simulation to reduce cost at a Police communications centre Abstract PurposeThis study is based at a Police Force's communications centre which undertakes a vital role in receiving and processing emergency and non-emergency telephone calls from the public and other agencies. The purpose of the study is to evaluate a method for addressing the conflict between the need to reduce cost and the requirement to meet national standards in terms of a timely response to customer calls. Design/methodology/approachIn a 2-stage methodology a Activity Based Costing (ABC) approach is used as a framework to show how costs are generated by the three 'drivers' of cost which relate to the design efficiency of the process, the demand on the process and the cost of resources used to undertake the process. The study then provides an analysis from a resource driver perspective using discrete-event simulation to model workforce staffing scenarios. FindingsCost savings within the police communications centre are identified from an analysis of the three drivers of cost.Further analysis from a resource driver viewpoint using a simulation study of an alternative workforce schedule predicted an overall reduction in staffing cost of 9.4%. Originality/valueThe study outlines an innovative method that identifies where cost can be reduced using activity-based costing and then provides an assessment of strategies that aim to reduce cost whilst maintaining service levels in a police operation using simulation.

Understanding the concept of ‘demand’ in policing: a scoping review and resulting implications for demand management

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Probabilistic time‐driven activity‐based costing

“…The computed practical capacity is then used in TDABC calculations. In the same vein, Greasley and Smith (2017) had previously proposed to use ABC to show how costs are generated, and based on the ABC results they define different resource allocations which are analyzed using discrete event‐simulation. The authors use simulation to assess other (different from costs) system performance indicators.…”

Evaluating the Use of the Activity Based Costing Method in the Construction Industry in the V4 Countries

“…The ABC expansion among enterprises in the Czech Republic is currently comparable with neighbouring countries, although the extent of its use is lower. Duh [7], Greasley, Smith, [8] argue that Activity Based Costing is an effective method not only for managing costs but also for strategic decisions. It is shown that businesses that know and optimize their processes are ready for changes caused by the external environment.…”