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Variance analysis, normed costs and public safety organizations

  • Michael Ryan

This study recognizes that public safety organizations, including military units and fire services as well as the police, will normally be budget constrained. It also recognizes that subunits of these organizations will not always be employed in their highest priority activities. With those perspectives the study shows how such organizations can optimally redistribute resources and reallocations of activities between units in response to variable demands simultaneously with the determination of optimizing norms for levels and costs of activities and for transfers of resources and activities between units. The study draws on the ideas of variance analysis from accounting and peak load pricing and duality from economics to derive optimizing levels of activity for subunits within an organization in response to varying demands on the resources and performance of the organization as a whole. It also provides a critique of the standard data envelopment analysis aproach to activity analysis on the grounds not only that that approach is not cost related, but also that it does not provide for the endogenous transfer of activities and resources between units.

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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 33 (2001)
Issue (Month): 6 ()
Pages: 755-762

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Handle: RePEc:taf:applec:v:33:y:2001:i:6:p:755-762
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