A simulation analysis of arrest costs
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A simulation analysis of arrest costs A Greasley University of Derby This paper presents results from a study that incorporates an activity based costing (ABC) analysis within a stochastic discrete-event simulation model. The study involves building a model of the arrest and custody process for a Police Force within the UK. The study outlines the use of simulation and ABC in enabling the cost of each arrest type to be estimated as well as a tool for resource deployment under a scenario of a change in the law regarding `late drinking'. The use of stochastic simulation ensures that variation in activity is considered during the analysis and resources are therefore deployed over time to ensure that service quality levels are maintained. Keywords: simulation; activity based costing; Police
Introduction Capacity management in service industries is concerned with matching resources deployed with demand. Services are also characterised by having a large part of the resources available as labour. Unfortunately this often leads to a situation of management of resources by inputs (budgets). Therefore the amount of resources (people, capital) deployed are based on historical budgets with a large proportion classi®ed as overhead and ®xed with an annual addition for in¯ation. Departments are then managed by tracking variances in expenditure from budgeted amounts. However resource allocation decisions in the Police service could also be informed by moving from costs de®ned in a general organisational budget to an output-oriented budget.1 The activity based costing (ABC) approach2 allows the user to distinguish between resource usage and resource expenditure, the difference being unused capacity. Once identi®ed this capacity can either be eliminated, reducing costs, or re-deployed, improving effectiveness. A weakness of the ABC approach is that it does not incorporate the effect of the variation of resource usage over time in response to variations in demand. This is particularly relevant in service operations where the intangible nature of the service does not permit storage of a physical product as a buffer against demand ¯uctuations. Freeman3 presented a simulation approach that provides aggregate costs for police activities based on an activity survey of how staff spend their time on duty. This paper describes a discrete-event simulation implementation of the ABC model. This allows the incorporation of statistical
Correspondence: A Greasley, University of Derby, Kedleston Road, Derby DE22 1GB, UK.
variation in activity duration and therefore activity cost, rather than treating the cost of an activity as a deterministic quantity. The aim is to provide management with information on the variability of cost outcomes in addition to a prediction of the average cost implications of resource decisions. Activity based costing Turney4 outlines an ABC model that has two main views (Figure 1). The cost assignment view
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