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If the project is to be handled on a periodic recalculation basis, rather than one that is automatically updated whenever new information is introduced into the accounting system, then all linkages can be no more than manual retyping of existing information into a separate ABC However, a fully integrated ABC system will require the extensive coding of software interfaces between the two systems, which is both time-consuming and expensive These changes may include some alteration of the corporate chart of accounts, the cost center structure, and the cost and revenue distributions used by the accounts payable and billing functions These are major changes, so the level of system integration should be a large proportion of the scope discussions A final scope issue is a determination of how many costs from nonproduction areas should be included in the system.

Table 12.1 Risk Terminology De nitions Risk A measure of probability and severity of undesired effects. Combination of the probability of occurrence of harm and the severity of the harm. Hazard, chance of bad consequences, loss and so on, exposure to mischance. Systematic use of available information to identify hazards and to estimate the risk. A comprehensive evaluation of the risk and its associated impact. Overall process comprising a risk analysis and a risk evaluation. Process through which decisions are reached and protective measures are implemented for reducing risks to, or maintaining risks within, speci ed levels. Judgment, on the basis of risk analysis, of whether a risk which is acceptable has been achieved in a given context. Systematic application of management policies, procedures and practices to the task of analyzing, evaluating and controlling risk. The FDA Glossary, with reference to the IEEE The GAMP risk guide

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For those companies that have proportionately large production departments, this may not be an issue; but for service companies or those with large development departments, these other costs can be a sizable proportion of total costs, and so should be included in the ABC system These costs can come from areas as diverse as the research and development, product design, marketing, distribution, computer services, janitorial, and administration functions Adding each new functional area will increase the administrative cost of the ABC system, so a key issue in scope determination is whether the cost of each functional area is large enough to affect the activity costs calculated by the ABC system Ones with a negligible impact should be excluded Once we have determined the scope, we must next separate all direct materials and labor costs and set them to one side.

P1: KTX WY022-24 WY022/Pfaffenberger WY022/Pfaffenberger-v3.cls June 10, 2004 8:53

These costs are adequately identified by most existing accounting systems already, so it is usually a simple matter to identify.

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suspect s constraint suspension, the suspect is exonerated; otherwise the component is still a part of the suspect set. This quote is in Ronald H. Ballou, Business Logistics Management, 3rd ed .. Englewood Cliffs, NJ: Prentice-Hall, 1992, p. 4. Douglas M. Lambert and James R. Stock, Strategic Logistics Management, 3rd ed. Homewood, IL: Irwin, 1993. The discussion on LogNet is from Robbie T. Nakatsu, Designing Business Logistics Networks Using Model-Based Reasoning and Heuristic-Based Searching, Expert Systems with Applications 29, no. 4 (2005), 735 745. Ronald H. Ballou, Heuristics: Rules of Thumb for Logistics Decision Making, Journal of Business Logistics 10, no. 1 (1989), 122 132. Ibid. See Davis and Hamscher, p. 305, for a discussion on the limitations of model-based reasoning. There are numerous examples of model-based diagnosis in the literature. For example, R. Milne, C. Nicol, and L. Trave-Massuyes, TIGER with Model-Based Diagnosis: Initial Deployment, Knowledge-Based Systems 14, no. 3 4, (2001), 213 222. S. Montani et al., Integrating Model-Based Decision Support in a Multi-Modal Reasoning System for Managing Type 1 Diabetic Patients, Arti cial Intelligence in Medicine 29, no. 1 2 (2003), 131 151. F. Wotawa, Debugging VHDL Designs Using ModelBased Reasoning, Arti cial Intelligence in Engineering 14, no. 4 (2000), 331 351. See, for example, Ramesh S. Patil, Arti cial Intelligence Techniques for Diagnostic Reasoning in Medicine, in Exploring Arti cial Intelligence. San Mateo, CA: Morgan Kaufmann, 1988, pp. 347 380. He explores the arti cial intelligence techniques used for diagnosing diseases in medicine. Of particular relevance is their experimental program called ABEL. ABEL s knowledge base attempts to capture the underlying causal mechanisms of disease processes.

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