Cost management method for increasing the profitability of enterprises, with reference to the production SMEs in the Republic of North Macedonia

The globalized world in which the companies operate, constantly changes the conditions under which the companies perform their activities, offer their products/services and manage their cost activities. This pressure affects the profitability of the enterprises and finding the right way to balance their cost-profit basis becomes one of the main factors for success. Hence, working towards being profitable, but keeping the costs at the lowest level are some of the challenges that many businesses face. Therefore, the aim of this paper is to analyze the cost management-method that N. Macedonian companies and the obtained results will further enhance the knowledge of other business entities in managing their business operations

QPLAN: Decision support for evaluating planning quality in software development projects

Decisions about whether or not to approve a project plan for execution are critical. A decision to continue with a bad plan may lead to a failed project, whereas requesting unnecessary additional planning for an already high-quality plan may be counterproductive. However, these decisions can be influenced by psychological biases, such as the endowment effect, optimism bias and ambiguity effect, which are enhanced when uncertainty is substantial and information incomplete. As a result, a non-biased model for evaluating the quality of project planning is important to improve planning approval decisions and resource allocation. This paper introduces a novel artifact (QPLAN) that evaluates and improves planning quality, and a case study to demonstrate its effectiveness within a business environment

Parallel Innovation Contests

We study multiple parallel contests where contest organizers elicit solutions to innovation-related problems from a set of agents. Each agent may participate in multiple contests and exert effort to improve her solution for each contest she enters, but the quality of her solution also depends on an output uncertainty. We first analyze whether an organizer's profit can be improved by discouraging agents from participating in multiple contests. We show, interestingly, that organizers benefit from agents' participation in multiple contests when the agent's output uncertainty is sufficiently large. A managerial insight from this result is that when organizers elicit innovative solutions rather than low-novelty solutions, agents' participation in multiple contests may be beneficial to organizers. We further show that an organizer's profit is unimodal in the number of contests, and the optimal number of contests increases with the agent's output uncertainty. This finding may explain why many organizations run multiple contests in practice, and it prescribes a larger number of contests when organizations seek innovative solutions rather than low-novelty solutions

Encouraging help across projects

Companies struggle with timely project execution despite employing sophisticated management methods. Although help across projects is critical for time performance, it has not been explicitly incorporated into project management ( PM) systems. We model a PM system, based on an innovative real-life practice, that both incorporates and shapes project managers' helping behavior. A help process is at the core of this system, in which project managers may ask for and provide help while top management facilitates such exchanges. We find that companies should take a nuanced approach when designing help exchange and time-based incentives in tandem. A company that faces high project rewards after delays and highly effective help can benefit from inducing help because doing so enables the pursuit of projects it might abandon if delayed or even at the outset. The formal help process delivers value by creating and exploiting interdependencies between projects. These interdependencies allow project prioritization by inducing different effort levels in otherwise identical projects. A help process also allows the company to tune the timing of efforts by front-loading or back-loading project work. The benefits of a help system accrue through cost efficiencies, increased probability of success under help, and intertemporal incentive effects that encourage early efforts. However, because the help process creates the opportunity for free riding, a help system is not always recommended and a no-help system may perform better, especially when there are low project rewards after delay and low opportunity costs for project work

The Management of Direct Material Cost During New Product Development: A Case Study on the Application of Big Data, Machine Learning, and Target Costing

This dissertation thesis investigates the application of big data, machine learning, and the target costing approach for managing costs during new product development in the context of high product complexity and uncertainty. A longitudinal case study at a German car manufacturer is conducted to examine the topic. First, we conduct a systematic literature review, which analyzes use cases, issues, and benefits of big data and machine learning technology for the application in management accounting. Our review contributes to the literature by providing an overview about the specific aspects of both technologies that can be applied in managerial accounting. Further, we identify the specific issues and benefits of both technologies in the context management accounting. Second, we present a case study on the applicability of machine learning and big data technology for product cost estimation, focusing on the material costs of passenger cars. Our case study contributes to the literature by providing a novel approach to increase the predictive accuracy of cost estimates of subsequent product generations, we show that the predictive accuracy is significantly larger when using big data sets, and we find that machine learning can outperform cost estimates from cost experts, or produce at least comparable results, even when dealing with highly complex products. Third, we conduct an experimental study to investigate the trade-off between accuracy (predictive performance) and explainability (transparency and interpretability) of machine learning models in the context of product cost estimation. We empirically confirm the oftenimplied inverse relationship between both attributes from the perspective of cost experts. Further, we show that the relative importance of explainability to accuracy perceived by cost experts is important when selecting between alternative machine learning models. Then, we present four factors that significantly determine the perceived relative importance of explainability to accuracy. Fourth, we present a proprietary archival study to investigate the target costing approach in a complex product development context, which is characterized by product design interdependence and uncertainty about target cost difficulty. We find that target cost difficulty is related to more cost reduction performance during product development based on archival company data, and thereby complement results from earlier studies, which are based on experimental studies. Further, we demonstrate that in a complex product development context, product design interdependence and uncertainty about target cost difficulty may both limit the effectiveness of target costing

Improving decision making for incentivised and weather-sensitive projects

The field of project management has originated from the domain of operational research, which focuses on the mathematical optimization of operational problems. However, in recent decades an increasingly broad perspective has been applied to the field of project management. As such, project management has spawned a number of very active sub- domains, which focus not solely on the scheduling of the project’s baseline, but also on the analysis of risk, as well as the controlling of project execution. This dissertation focuses on two areas where existing literature is still lacking. The first area is the use of incentivised contractual agreements between the owner of a project, and the contractor who is hired to execute the project. Whereas this area has received growing attention in recent years, the majority of studies remained strongly descriptive. Hence, the aim of the first part of this dissertation is to develop a more prescriptive approach from both the owner’s and the contractor’s perspective. The second part of this dissertation investigates the use of dedicated weather models to improve operational performance of weather-sensitive projects. During recent decades, significant effort has been made to improve the quality of weather simulation models. Moreover, the amount of available weather data has been steadily increasing. This opens up a lot of new possibilities for using more precise weather models in order to support operational decision making. In spite of this, the number of applications of these weather models in operational research has remained rather limited. As such, the aim of the second part of this dissertation is to leverage these weather models to improve the scheduling of offshore construction projects, as well as preventive maintenance of offshore wind turbines

Three essays on product management : how to offer the right products at the right time and in the right quantity

Across virtually all industries, firms share one common objective: they strive to match their supply with customer demand. To achieve this goal, firms need to offer the right products at the right time and in the right quantity. Only firms that excel in all three dimensions can provide products with a high customer value and achieve extraordinary profits. This thesis investigates specific challenges that a firm has to overcome on its way to a good match between supply and demand. The first essay investigates how a firm can already select the right products during the product development phase. To make good resource allocation decisions, the firm needs to collect valuable information, and incentivize information sharing across the entire organization. The key result is that the firm needs to balance individual and shared incentives to achieve this goal. However, such compensation schemes come at the cost of overly broad product portfolios. The second essay examines how uncertain customer demand patterns affect seasonal products. Specifically, the timing of the product’s availability is crucial. Too early, and high opportunity and inventory costs may devour profits. Too late, and the firm loses its customers. In short, the firm has to balance a product’s market potential with the costly market time. This tradeoff may induce a firm to stock more inventories to satisfy a smaller market potential. Lastly, the third essay investigates how customer substitution influences the inventory decisions of different supply chain members in the presence of upstream competition. We find that customer substitution has a non-monotonic effect on the supply chain members’ decisions, and that left-over inventories may decline even when initial inventories are raised