Question

Discuss the concept of cost minimization models. When can they be applied, and what are the steps to follow when using them?

Answer 1

Cost minimization model is a general expression for the overall cost per unit time in a queuing system. It is widely used to calculate the optimal number or cost per day/unit to take best decision. It can be expressed as-

TC= SC + WC, where TC is total cost, SC is service cost and WC is waiting cost.

They are applied in calculating freight unloading to find the optimal number of managers to be hired with maintaining minimum cost per day, It also calculates service quality rate, distribution of service time, calculate service optimal times in self-service systems, in hospitals to calculate cost per admission and cost per patients daily basis, healthcare industries, etc.

As, it calculates the cost of two similar interventions to obtain the less expensive. One of the most common model od cost minimization is Global trees where only one connection topology is involved and with small scale optimization, local trade-offs are required.  

It consists Linear programming models which follows the steps like-

Defining the variables, constructing the objective function, formulation of constraints and finding the feasible solution, calculation of minimum and maximum values in feasible area.