Accounting for complexity in costing high technology manufacturing

William W. Cooper, Kingshuk K. Sinha, Robert S. Sullivan

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


A new type of 'costing unit' is proposed in the form of an adjusted measure of plant output that takes into account the increases in complexity of operations with rapid and continuous changes in products and process technologies. Use of this costing unit makes it possible to conduct meaningful analyses of past and present plant performance using historical costs, and to project future cost behavior even in the presence of ongoing technological changes. Employing a simple power function, tests conducted in a wafer fabrication plant of a semiconductor manufacturing company show that this costing unit yields better statistical fits and predictions than are obtainable from output data that are not similarly adjusted. The power functions used for the different cost components are extended to include Cobb-Douglas forms in a simple recursive regression system that makes it possible to relate overall cost behavior to these underlying components.

Original languageEnglish (US)
Pages (from-to)316-326
Number of pages11
JournalEuropean Journal of Operational Research
Issue number2
StatePublished - Sep 7 1995

Bibliographical note

Funding Information:
We would like to thank Paul Becker, Warren Hastings, Jim Macek, Jack Smith and Paul Steele for their assistance in conducting this study. We appreciate the comments of Wayne Morse and anonymous reviewers on earlier versions of this paper. We are grateful for the support received for this study from the IC 2 Institute and the Manufacturing Systems Center of The University of Texas at Austin as well as a grant from Advanced Micro Devices, Inc.

Copyright 2018 Elsevier B.V., All rights reserved.


  • Complexity measures
  • Cost analyses
  • High technology manufacturing


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