Fixed and semivariable cost
structures normally are less than optimal areas to begin with, since they often take longer to affect.
We also analyzed the effect of this modeling approach for semivariable costs
by including two Air Force cost metrics: Air Force total ownership cost (AFTOC) and logistics cost planning factors costs per flying hour (CPFH).
If trade takes place, shipping any of the commodities to another agent incurs semivariable costs
Continuing with the example above, as the volume for a test system increases by 10%, the semivariable costs
would increase, but not by 10%.
Due to the existence of fixed and semivariable costs
, actual costs do not change in direct proportion to a single cost "driver." The authors acknowledge this limitation in viewing the use of their model outputs as "order of magnitude" forecasts.
However by adopting a less restrictive approach than that proposed by Areeda and Turner they have to cope with some very difficult questions involving overhead allocations, and the distinction between variable and semivariable costs
. Their judgment about the size and assignment of such quantities may make a crucial difference to the finding in stage I and whether or not a follow-up reference is made to the MMC.
This is because fixed and semivariable costs
are absorbed by a larger volume of dispensed prescriptions.