The Differences Between CMM And CMMI

The Differences Between CMM And CMMI The recent attitude of the organisations to make the products complex in order survive the competitors, made them to employ software in their organisations. However, the community of information systems known for its poor product quality made them to research the methods to improve its efficiency. This led them to discover that the focus was needed more on the processes which in turn led to improve the quality of the software products. The process when used it an efficient way can make the organisations maintain the consistency and help to achieve their mission. Many models and programmes described the ways to improve the product quality. Of those, The Capability Maturity Model (CMM) found by SEI, in 1984, gave a clear sight to the organisations the efficient way to improve the process. Later, it was found that it can be employed in other fields too and thereafter it was employed to improve business processes. However this method had some drawbacks and those were superseded by the Ca pability Maturity Model Integration (CMMI). This essay portrait the key differences between these models and describes the effectiveness of using CMMI. 2. Differences between CMM and CMMI 2.1 CMM Overview The first CMM, developed in 1990, was developed for the purpose to improve the process in software development [1]. This model proved to be a successful one and thereof, it became a generalised model for improving the processes other than SW development process like software engineering, system engineering, software maintenance, software management, risk management and also being employed in other industries, governments, organisations and also for business process improvement [1]. Fig.1 CMM Maturity Levels [2] The CMM for Software (SW-CMM) is a framework that provides the way to manage a process effectively. It is a stair-cased structure wherein each step is a maturity level describing the current capability of the process. It tells where the processes are. The CMM scales the organisation from 1 to 5 based on the KPAs achieved by the organisations. Fig. 2.2 Structure of the CMM [3] As shown in the figure 2, each maturity level defines the process capability at that stage and contains (other than Initial) Key Process Areas (KPA) defined of goals to be achieved. Each KPA has certain key practices that are to be strictly followed to achieve the goals. These key practices are arranged as groups (Common features) consisting infrastructure and implementation. 2.2 CMMI Overview à ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€¦Ã¢â‚¬Å"CMMI is a process improvement approach that provides organizations with the essential elements of effective processes that ultimately improve their performance. CMMI can be used to guide process improvement across a project, a division, or an entire organization.à ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ã‚  [4]. Both CMM and CMMI have the same five maturity levels. In CMMI, each process area has specific goals and generic goals that define the generic and specific practices respectively. Fig.3.1 CMMI Structure [5] There are two types of approaches à ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬ staged and continuous. In the case of the staged approach, KPAà ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢s are defined and then based on it the maturity level structure is drawn whereas in the continuous approach, a specific KPA is chosen and then it is relatively improved by using the capability levels [6]. The CMMI too scales the organisation from a scale of 1 to 5 based on the KPAs. It also provides an appraisal which focuses on improving the plans for the organisations. There are three classes of appraisals, namely class A, B and C [7]. 2.3 Key Differences The factors that distinguish CMM and CMMI during implementation are: 1.integration, 2.KPA, 3.approach and 4.paperwork [8]. 2.3.1 Integration: The CMM has individual models for each function. But when the individual processes when integrated led to few discrepancies like model overlapping, contradiction and each model had its own maturity level which lead to a confusion. This led to the increase in the costs of the companies that were put in training. But CMMI employs models that are classified on the basis of specific areas of interests. These models are those employed by industries successfully. To employ CMMI in an organisation, it must choose a model form the available 22 models wherein each module covers all the functionalities. 2.3.2 KPA: Both CMM and CMMI have 5 maturity levels. But there are differences in the KPAs of each maturity level. The differences in each model are as follows: 1. Initial: In both models, it covers the organisations without defined processes, having dynamic changes (ad-hoc) and undocumented. 2. Repeat: In CMM, the companies that seem to do the same process periodically attain this level. In CMMI, it requires a planned and defined ways of managing the requirements by estimating cost, time and resources. 3. Defined: CMM requires a standard, well-documented and consistent process with few degrees of changes to be followed. CMMI requires the process to be standardised, methodical and procedural with the use of tools. 4. Manage: CMM requires companies to quantitatively measure and monitor process thereby reducing risks. CMMI, n addition identifies and monitors the sub processes that contribute to overall efficiency. 5. Optimized: In CMM, the process is continuously improved by following the best software engineering practices but here the measures are taken simultaneously as the goals are satisfied. In CMMI, behaviour is selected and goals are set to support it. Behaviour is selected on the basis of goals and measures. 2.3.3 Approach CMM is an activity based model. It aims only in the completion of the process and does not care about the desired result and hence it does not motivate the company to make the necessary changes. But CMMI is a result oriented based on key performance areas and thereof it is a best practice for the companies and helps to avoid the possible risks at a very early stage. 2.3.4 Paperwork Both CMM and CMMI documentation has paperwork and meetings that leads to waste of effort and time of the personnel. However, in CMM is process-oriented whereas the CMMI is a goal-cum-result-oriented approach. 3. Benefits of adopting CMMI The organisations that adopted the CMMI reported the following benefits [9]: 3.1 Cost: The CMMI adoption led to reduced defect fix cost, reduced overhead rate, reduced cost of poor quality and increased the average cost performance index with decline in variation. 3.2 Schedule: It led to reduction in release turnaround time, reduction in average number of days late, increased percentage of milestones met, increased throughput that led to more releases per year, improvised and stabilised schedule performance index with decreased variance and increased time delivery accuracy. 3.3 Quality Reduction in software defects (KLOC), errors caused in the source code and the post-release defects and increased focus on quality by developers was observed after using CMMI. 3.4 Productivity Productivity was measured in metrics like number of statements produced per month, comparing the various builds, number of releases per year, software production etc, Productivity of the companies also increased. 3.5 Customer Satisfaction The customer satisfaction, measured using ratings and awards fees, increased since the time of delivery mentioned was accurate and also it was defect free. 3.6 Return on Investment (ROI) ROI ratio measured based on the defects that are overcome, the degree of automation activities and quality and process improvement, seemed to be on the positive side that motivated the organisations to employ CMMI. 4. Case Study of companies switching over to CMMI from CMM The following three points are the detailed reports [10] of the companies that evolved from CMM to CMMI which depicts the improvements and results of doing so. 4.1 Lockheed Martin M DS Initially, the organisation was assessed CMM level 2 in 1993. But later, in 1996 it moved to CMM Level 3 and then evolved to CMMI Level 5 in 2002 in integrating SE-CMM and SW-CMM. As a result of this, improvements in the customer satisfaction, productivity and the product cost were noted leading to the conclusion that the process improvement that lasted for nearly 10 years proved fruitful. Between 1996 and 2002, process improvement was continual and the company increased its productivity by 30% and decreased unit software cost and defect costs by 20% and 15% respectively. The customer satisfaction was achieved as there was an increase in percentage of the available award fees [10]. 4.2 Accenture Accenture, one of the reputed organisations, had a transition from the SW-CMM to the CMMI between May, 2001 and May, 2002. It attained the CMM Level 3 initially and when they moved to CMMI, during which they acquired CMMI Level 3. During the CMMI, the organisation focussed mainly on the processes related to the Measurement and Analysis, Decision Analysis and Resolution, generic goals and Integrated Product and Process Development (IPPD). As a result of the transition, improvements in the costs of quality and ROI ratio were captured. The ROI ratio achieved was 5:1 in the quality [10]. 4.3 Boeing Limited, Australia The Boeing Limited process performance was not up to the mark. Initially they were using CMM and Electronics Industry Alliance (EIA 731). Thereof, they decided to improve the process by adopting CMMI so as to 1. Integrate SE and SWE 2.Universal acceptance by customers and suppliers and 3.Risk analysis using Defence Material Organisation (DMO) strategy. There were improvements seen in the product cost, schedule/cycle time and the product quality. The results of adoption made defect fix costs, turnaround time and test audits (pre and post) decrease by 33%, 50% and 60% respectively and product quality increase to a major extent [10]. 5. Factors that have major impact From the case studies it is clearly evident that the integration, approach styles and the need for continuous improvements of the process by the organisation led to the organisations to move from CMM to CMMI. However there are many organisations like Bosch Gasoline Systems, Thales Research Technology, Sanchez Computer Associates Inc, still are using the CMM and reporting benefits thereof. 6. Conclusion CMMI models should be still integrated and developed such the costs involved and the efforts are reduced.

Case study: Emotions in the workplace

Case study: Emotions in the workplace Emotions are essential to humans as they permeate almost every aspect of our lives insofar as they guide our behaviour to fit with contextual demands. Emotions also motivate change and facilitate learning. They inform us when to fight or flight and serve as fundamental social functions. (Gross, 1999). As emotions are fundamental social functions, all emotional events are situations that are relevant to a persons well being. The type of event varies according to their valence (positive versus negative) and according to the strength of subjective feelings and physical reactions that they elicit in a person. There has been a number of studies that focus on the components and the importance of emotions. Existing research however lacks the events that cause emotional experiences. This research will focus on understanding the events that and the type of emotional experiences this will cause. Components of Emotions Emotion which is a term used widely in everyday language, constitutes a hypothetical construct, i.e., a conceptual and operational definition of an underlying phenomenon that constitutes the object of theory and research. Most modern emotion theorists have adopted a componential approach to emotion, suggesting that an emotion episode consists of coordinated changes in several components. Most of the theories in the field of recognise that emotion and cognition are intertwined. But emotion is not simply a cognitive process (Frijda, 1988) It is actually recognised as being: a psychological construct consisting of several aspects of components: a) the component of cognitive appraisal or evaluation of stimuli and situations, b) the physiological component of acitivation or arousal, c) the component of motor expression, d) the motivational component, including behaviour intentions or behaviour readiness, and c) the component of motor expression, d) the motivational component, including behaviour intentions or behaviour readiness and e) the component of subjective feeling state. (Scherer, 1984). Psychological arousal: This can be defined as physiological changes such as temperature sensations, respiratory and cardiovascular accelerations and decelerations, trembling muscle spasms, as well as feelings of constrictions in internal organs, are frequently part of emotion descriptions. (Ekman et al., 1983; Frijda, 1986; Stemmler, 2004). These neurophysiological changes in emotional episodes are generally attributed to (1) th emotion eliciting event disturbing ongoing homeostatic regulation and the smooth behavioural coordination, and (2) the preparation of appropriate adaptive responses (e.g., producing the necessary energy for appropriate actions such as fight or flight). Motor Expression: Facial and vocal expression, as well as gestures and posture during emotion episodes are generally considered to be central motor components of emotion (Ekman, 1984,1992; Izard, 1971). Darwin (1872/1998) conceptualized expression rudiments of formerly adaptive behaviours (e.g., clenching ones teeth as a rudiment of a biting response). In response, emotion researchers have highlighted the communicative functions of emotion expressions, informing others of an individuals reaction and its corresponding behaviour patterns. (Ekman, 1992; Frijda, 1986; Scherer, 1984; Tomkins, 1962). Subjective Feeling Individuals verbally report a multitude of qualitatively different feelings, using a rich emotion vocabulary. These internal sensations, often considered as necessarily conscious experiences, constitute irreducible qualities of feeling unique to the specific emotional experience of a particular individual (Frijda, 1986; Lazarus, 1991; Ortony Turner, 1990). The feeling component of emotion can be conceptualized as a reflection of all changes in components during an emotion episode, i.e., the results of event appraisal, motivational change, and proprioceptive feedback from motor expression and physiological reactions. It is important to define differentially the concepts in this fashion, as the tendency to use emotion (the process as a whole) and feeling (one of its components) as a synonyms results in confusion. (Scherer, 2000) Behaviour Preparation Emotion theories of an explicitly componential persuasion have explicitly postulated a motivational function of emotional responses in the form of behaviour preparation or action tendencies (Frijda, 1986: Scherer, 1984). Emotions interrupt ongoing goal-directed behaviour and produce action tendencies that are specifically adapted to dealing with the environmental contingency that has elicited the emotional response. Importantly this component of emotion generally prepares a general behaviour readiness as well as several alternative action tendencies allowing the organism to choose according to context and strategic considerations. Cognitive processes Emotions also have a cognitive component. This component consists of the appraisal processes that drive the coordinated changes in the components described above. Proponents of appraisal theories of emotion suggest that emotional reactions are determined by the subjective evaluation of events with respect to their significance for the well-being and goal attainment of individuals. (Scherer, 2004) In addition, emotions often have strong effects on perceptual and cognitive processes such as attention, thinking, memory, problem solving, judgement, decision making and the like. (Dalgleish et al. 1999) Furthermore it is important to understand the valence of emotions, hence various researchers have done research on everyday emotional experiences e.g. Boucher, Brandstatter Eliasz, Oately Duncan, Scherer Tannenbaum, Scherer, as well as Wallbott, Summerfield. This research has shown that the most frequent occurring emotional events are generally associated with relationships with other people (eg. Partner, family, friends), work-related situations, attainment of personal goals and life changes. Positive emotional events may include birth of a child, receiving a present, attending a concert or getting a job. Negative emotional events encompass critical situations, such as arguing with a close friend, learning that a family member is ill etc. (Scherer, 2004). Emotions link structure and agency, meaning that they are the link between social structure and social acting. (Barbalet, 2002). A widely held view in contemporary emotion psychology is that emotions or at least a core subset of emotions, are organised patterns of more or less specific cognitive, experimental, behavioural (action-related), expressive, and physiological components. This assumption which is frequently motivated by the hypotheses about the evoluntary origin and biological function of emotions is the common denominator of syndrome theories of emotion and it is shared by authors of otherwise fairly different theoretical persuasions. (Ekman, 1992; Izard 1977) This has an impact on how emotions can either distort individuals perceptions by imparing judgement and biasing information retrieval, or they can improve the accuracy of individuals perceptions by highlighting what is important and what is at stake. (Seo Barrett, 2007). In studies of escalation of commitment, emotions appeare to have a direct influence on the decision of whether to persist or withdraw from a failing situation. An example of this can be demonstrated by Wong and Kwong (2006) where it was demonstrated that the desire to escape the unpleasant emotions people during a decision-making dilemma can lead to de-escalation of commitment. In contrast, a study by Wong and Kwong (2007) found that the possibility of feeling regret can cause people to increase escalation of commitment. The importance of emotions in the workplace Organisations involve complex relationships that are interdependent often competitive and compulsory. Employees must often interact with a range of people not necessarily of their choosing. A hierarchical relationships normally characterises most organisations which includes status differences that are primarily caused by an emotional response. ( Tiedens, 2001) In organisations, employees learn what is expected and what is acceptable by means of social norms (Bettenhausen Murnighan, 1991; Chatman Barsade, 1995; Salancik Pfeffer, 1978). One type of organisation norm involves the emotions expressed by employees in the workplace (Kelly Barsade, 2001; Rafaeli Worline, 2001). Though almost all situations have implicit expectations concerning which emotions are appropriate or inappropriate to express (Ekman, 1973), employees frequently display certain emotions in the workplace in reaction to organisational-specific situations or events (Ashforth Humphrey, 1995; Martin, Knopoff Beckman, 1998) and as a way of fulfilling their work roles (Hochchild, 1983; Rafaeli Sutton, 1991; Sutton, 1991; Van Maanent Kunda, 1989). There is consistent evidence that the expression of certain emotions or at least of some specific response components for example, anger, fear, enjoyment, sadness and disgust the infamous basic emotions is distinctive and universal among the human species. (Ekman, 1993). The expression of other emotions, sometimes dubbed social or self-conscious emotions, such as shame, guilt, grief or embarrassment, does not seem to be universal, although patterns of expression are highly consistent within a socio-cultural setting. It seems patterns of expression are highly consistent within a socio-cultural setting. It seems that in whatever way the different expressions of these emotions may have evolved, as long as individuals stay in the cultural or social structure setting they were socialized in, they are on the safe side when it comes to interpreting emotion expressions. Thus, emotion expressions are a potent signaling device capable of conveying clues that allow the mutual attribution of un derlying feeling states. Moreover, emotion expressions also allow the inference of other corresponding mental states that are constituent for the emotion expressed. These attributions function as mechanisms that reduce social complexity and intercept double contingency circuits. They furthermore allow forseeing the consequences of an emotion for individual behaviour, the course of interaction, and the overall group behaviour. (Hortsmann 2003). This explains the reason why emotion expression may influence decision making. This is done by shaping individuals beliefs about the social environment (Baron, 1992). An emotion can be like a perceptual lens to determine what is potentially threatening to an individual in a particular situation hence determining a belief about the social environment. As the decision making is context is marked by uncertainty, decision makers behaviour is likely to be strongly influenced by cues in the social environment (Taylor, 1979). Through experience one will be able to understand and display certain emotion expressions. This is as a result of individuals being able to shape employees beliefs about what is expected, what is acceptable, and the possible consequences of things going wrong. In this way, emotion expression norms have a direct influence on decision making behaviour. These norms help influence beliefs about the social environment. It has been further proven that individuals are more sensitive to negative cues than to positive ones (Rozin Royzman, 2001). Further negative cues elicit stronger affective and behavioural reactions than do positive ones (Cacioppo, Gardner, Berntson, 1999). Experience and expression of negative emotions drive people to avoid situations that could lead to negative outcomes, such as threats and failure (Carver, 2001; Higgens, 1997). Based on above some it is in can be deduced that employees learn what is acceptable by means of social norms (Bettenhausen Murinighan, 1991; Chatman Barsade, 1995; Salancik Pfeffer, 1978). Though almost all situations have implicit expectations concerning which emotions are appropriate or inappropriate to express (Ekman, 1973), employees frequently display certain emotions in the workplace in relation to organization-specific situations or events (Ashforth Humphrey, 1995; Martin, Knopoff Beckman, 1998) and as a way of fulfilling their roles (Hoschchild, 1983; Rafaeli Sutton, 1991; Van Maanen Kunda, 1989). Therefore we can deduce that emotion expression may influence organizational decision making by shaping individuals beliefs about the social environment (Baron, 1992). Beliefs concerning emotions expressed in the workplace can affect decision making behaviour by acting as a perceptual lens to determine what is salient to an individual in a particular situation (Lazarus Folkman, 1984). Organizational decision making often occurs in the context of ambiguous cues (Bronckner, 1992; Staw, 1997) Organisational decision making often occurs in the context of complex and ambigious cues (Brockner, 1992; Staw, 1997). Because the decision making context is marked by uncertainty, decision makers behaviour is likely to be strongly influenced by cues in the social environment (Taylor, 1979). Coworkers emotion expressions can shape employees beliefs about what is expected, what is acceptable, and the possible consequences of things going wrong. In this way, emotion expression norms do not have a direct influence on decision making. Rather norms influence individuals beliefs about the social environment. Emotional fit will help an employee keep his/her emotional resources at optimum levels. The deviation between the activation levels of affective trait and emotional climate will make the workplace emotionally draining environment for the employee. (Gardner and Cummings, 1988). An important topic in the psychology of emotions is whether an emotional experience and reactions result from innate biological patterns or whether such reactions and experiences are culturally determined. Charles Darwin (1872) was one of the most influential in this discussion, arguing for innate emotion programmes and using an intriguing multitude of research tools now common in cross cultural psychology, such as observations and questionnaires. Other theories of emotion including Tomkins (1962/1963), Izard (1977) and Ekman (1984), followed his line of reasoning and succeeded in demonstrating cross-cultural equivalents of facial expression patterns for some fundamental emotions. On one hand, cultural relativists like Birdwhistell (1970), have proposed that emotional experiences and reactions differ depending on cultural factors. These include the following aspects namely: the nature of the emotion eliciting the situation (in particular psychological symptoms, nonverbal reactions li ke facial or vocal expressions, subjective experiences or feeling state of a person and the regulation attempts used to control or manage the situation and the emotional reactions (Wallbott and Scherer, 1985,pp 763-764). That is, in order to address the question of universality versus cultural specificity of emotion, one has to demonstrate conclusively that situations eliciting specific emotions are the same across cultures, that reactions and symptom patterns accompanying emotional experiences are universal, and that control and coping attempts used to regulate emotional experience are the same worldwide. The above demonstrates the importance of having an emotional fit as well as the importance of emotions in the workplace. Emotions are seen as one of the basic functions of the human psyche and therefore play a central role in psychology (Salovey Mayer, 1990), especially in work and organisational psychology, both in theoretical and applied settings. Emotions exist in everyday workplaces and they impact on peoples performance. Because this impact can sometimes be detrimental, a belief in relegating emotions behind the rule of logic and reason is deeply engrained in modern managers psyche. In truth, this belief goes all the way back to the teachings of Plato who saw logic as the path to objective truth, while emotions were simply irrational temptations to be avoided. This belief was entrenched in the principles of scientific management developed by Frederick Taylor in the early 20th century, and continues to permeate modern society (Kapp, 2000). Emotion has represented a tantalizing subject for social inquiry because it appears to tell us about our true selves : the self that , after all the thinking an d the interacting are done, feeling the welling up of rage , the tender pangs of love , the black emptiness of despair. (Boellstorff Lindquist , 2004). The function of emotion evolves into a process that not only permits the evaluation of the consequences of another behaviour but also aids in the prediction of anothers emotional behaviour. (Darwin, 2005). Being as we spend most of our time at work, it is important to understand the impact that emotions will have on our fit to an organisation emotionally, the link between emotion and climate of an organization as well as copying responses to an exhausting environment. Emotional fit will help an employee keep his /her emotional resources at optimum levels. The deviation between activation levels of affective trait and emotional climate will make the workplace an emotionally draining environment for the employee. This proposition is line with the activation theory. Activation theory holds that every individual has characteristic level of activation that he/she is motivated to maintain in his/her environment. Assuming that emotional climate has an influence on employees affective experiences at work and considering the strongly intertwined relationship between activation and emotion, it is plausible to argue that the emotional climate of a workplace comprises a force that can influence the experienced activation level of employees in the workplace. (Maslach, 1982). When there is an emotional fit, as a copying response to the exhausting impact of the workplace, the employee will attempt to emotionally detach himself/herself from other people and develop a depersonalized response to them (Cordes and Dougherty, 1993). This tendency will be reflected in the way the employee expresses emotions whilst interacting with others at work. Specifically, when there is a misfit between an employees affective trait and the emotional climate of his/her workplace, the employee will engage in surface acting while interacting with others, which refers to altering ones displayed emotions to be able to express the desired behaviours at work (Hochschild, 1983). Supporting this argument, prior research has suggested that surface acting can be utilized by employees as a way of buffering themselves from emotional exhaustion. (Conrad and Witte, 1994) When an employees emotional resources are depleted as a result of emotional misfit, this will increase his/her tendency to psychologically and physically withdraw from work. From an employees intention to get back to his/her characteristics level of activation altered by the impact of emotional climate. When the work environment becomes psychologically uncomfortable, the employees often try to psychologically withdraw from the work environment by engaging in a number of non work related activities, such as daydreaming and spending time on personal matters (Lehman and Simpson, 1992). When there is an emotional misfit, the employees task performance will decrease because the excessive amount of tension and stress experienced by the emotionally exhausted employee (Maslach and Jackson, 1981) hinders his/her cognitive and attention capacity to perform his/her task effectively. (Eysenck, 1983). Emotional exhaustion has also been considered to result in lower level of self-efficacy expectations (Brief and Aldag, 1981) and reduced sense of personal adequacy, both of which are elements of task performance. (Maslach, 1982). We can thus assume that the expression of emotions in organisational life can have important consequences for the person displaying the emotion as well as for the person who is the target of this display. (Rafaeli Sutton, 1989). The impact of culture on emotions According to Frijda and Mesquita (1995), cultural influences on the emotions process are mediated to a larger extent by the significance an emotion has for an individual. Frijda and Mesquita distinguished among three aspects of emotion that are culturally influences. Frijda and Mesquita distinguished three aspects of emotion that are culturally influenced. First they are considered social consequences of emotions that regulates social expression and suppression of emotions. Second they stressed the importance of norms for experiencing different emotions. Thirdly they discussed social- cohesive function of emotions. Several ethnographic emotions, particularly in how the expressions of emotions is valued. There are strong cultural difference in display rules (Ekman Friesan, 1969; Izard, 1980) that are learning when going through the socialisation process (Saarni, 1999). There are also cultural differences in the norms for experiencing different emotions. (Hoschild, 1093). This would be relevant to the discussion regarding social norms that describe how people should feel in specific situations, eg., on a wedding day or at a funeral. In addition to the situational feeling rules, norms for the experience of emotions can also be present in a society in the form of generalized expectations. This means that the emotions can differ in their desirability and perceived appropriateness across situations. The emotion climate of nations can be characterized by generalized norms for experiencing different emotions an the fact that these norms are subject to historical change. (Stearns, 1994; Stearns Lewis, 1998).

The Challenges of Being a Black Man in America Essay -- Racism, Prejud

"Black Lung" is a chronic disease of the lungs mostly associated with coal miners; "Black Magic" is the practice of witchcraft; illegal transactions take place in a a "Black Market"; a "Black Sheep" is a person who does not have the same values or behavior as their family. How does all this pertain to being a black man in America today? These examples indicate that the English language is prejudiced, and the process of learning the language teaches prejudice and passes on racist ideas to children as they learn to communicate. This results is the racist American society which we see today. However, before dealing with the burden of blackness, let us dive into what race really is. Some believe that race is a biological term, understandably so. People with similar physical appearance, such as eye shape or color, could be assumed to be of the same heritage, but this is not always true. According to the authors of Intercultural Competence, "Contrary to popular notions . . . race is not primarily a biological term; it is a political and societal one that was invented to justify economic and social distinctions. . . . One's 'race' is best understood as a social and legal construction" (32). Since race is not inherent or "naturally ordained" but a social and legal construction, the use of this term is subjective. One's "blackness" or "whiteness" is dependent on how society defines it. What are white and black anyway? As people of different origins and of different heritages, the average American is a "mutt" (of mixed ancestry). What defines what "race" the average American is or what race you are? The color you turn out to be? Is Stacy, a person who is ninety-five percent "white" and five percent "black," considered black because th... ...g the meaning to a human being. As the unknown poet said, illustrating how so many others feel: "But in his mind it wasn't lost, the one undeniable fact/That in a land of justice for all, he always would be BLACK." Works Cited Bradshaw, York W., Joseph F. Healey, and Rebecca Smith. Sociology for a New Century. Boston: Pine Forge Press, 2001. DuBois, W.E.B. The Souls of Black Folk. 1903. New York: Bantam, 1989. Gazzaniga, Michael, and Todd F. Heatherton. Psychological Science. New York: W.W. Norton and Company, 2003. Holy Bible: New Living Translation. Wheaton: Tyndale, 1996. Lustig, Myron W., and Jolene Koester. Intercultural Competence. 4th ed. San Francisco: Allyn and Bacon, 2003. Merriam-Webster's Dictionary Online http//www.m-w.com/cgi-bin/thesaurus. Rottenberg, Annette T. Elements of Argument. 7th ed. New York: Bedford/St. Martin's, 2003.

Damn Near Everything There Is To Know About Cells: Essay -- essays res

Damn Near Everything There Is To Know About Cells: Biology Cell Report There are many parts of a cell, they all have specific duties, and are all needed to continue the life of the cell. Some cells exist as single-celled organisms that perform all of the organism's metabolism within a single cell. Such single-celled organisms are called unicellular. Other organisms are made up of many cells, with their cells specialized to perform distinct metabolic functions. One cell within an organism may be adapted for movement, while another cell carries out digestion. The individual cells no longer carry out all life functions, but rather depend on each other. Many-celled organisms are called multicellular. When a group of cells function together to perform an activity, they form a tissue. The cells of a human are organized into tissues such as muscle and nerve tissues. Plant tissues include those of the stem and root. Many cells in tissues are linked to each other at contact sites called cell junctions. Cell junctions help maintain differences in the internal environment between adjacent cells, help anchor cells together, and allow cells to communicate with one another by passing small molecules from one cell to another. Groups of two or more tissues that function together make up organs. An organ system is a group of organs that work together to carry out major life functions. Eukariotic Cell Structure: Boundaries and Control: Plasma Membrane - The plasma membrane is sometimes called the cell membrane, or the cellular membrane. It is the outermost part of the animal cell, and it's purpose is to enclose the cell, and change shape if needed. The cell membrane is capable of allowing materials to enter and exit the cell. Oxygen and nutrients enter, and waste products such as excess water leave. The plasma membrane helps maintain a chemical balance within the cell. Cell wall - The cell wall is an added boundary to the cell. It is relatively inflexible, and surrounds the plasma membrane. The cell wall is much thinker than the plasma membrane and is made of different substances in different organisms. The cells of plants, fungi, almost all bacteria, and some protists have cell walls. Animal cells have no cell walls. Plant cells contain cellulose molecules, which form fibers. This fibrous cellulose of plants provides the bulk of the fiber in our diets. Chitin, a nitr... ... pigments, molecules that give color. Structures for Support and Locomotion: The cytoskeleton is a network of thin, fibrous elements that act as a sort of scaffold to provide support for organelles. It also helps maintain cell shape in a manner similar to the way poles maintain the shape of a tent. The cytoskeleton is usually composed of microtubules and microfilaments. Microtubules are thin, hollow cylinders made of protein. Microfilaments are thin, solid protein fibers. Microtubules and microfilaments make up most of the sytoskeleton. Cilia - Cilia are only contained in some cells. They are short, numerous, hairlike projections out of the plasma membrane. Cilia tend to occur in large numbers on a cell's surface, and their beating activity is usually coordinated. Flagella - Flagella are longer projections that move with a whiplike motion. Cells that have flagella only have one or two per cell. In single-celled organisms, cilia and flagella are the major means of locomotion. Sperm cells of animals and some plants move by means of flagella. Organisms that contain many cells, including humans, have cilia that move fluids over a cell's surface, rather than moving the cell itself.

Essay --

Terraforming Mars Project Terraform Mars is a difficult task that us as humans are trying to accomplish to fulfill the entirety of our speeches . There is a number of ways to achieve this task , but there are many questions that we do not have answers for. This paper will present my idea for how we could terraform Mars to successfully elongate the human speeches . According to Thefreedictionary. com terraforming is defined as transforming another planet into one having the same characteristics of landscape as earth. The terraforming process could take anywhere from 100 years to 20,000 thousand years to complete entirely, due to the tedious process of making Mars suitable for human life. I believe that it will take nearly 1,000 years to complete entirely my process of terraforming mars. What makes it so difficult to get to Mars is one the launch window time, which mean when Earth and Mars are nearest to each other. The time that we know of so far for the next launch windows is 2013 November -2014 January,2016 January- April , and 2018 April -May,2020 July - September according to wikipedia. This is why it is so difficult to get to Mars, there are only certain times that you can launch and it be such a short flight. This is one of the many reason that I believe that it will take 1,000 years to terraform Mars. As we arrive to Mars there are some resources already there, such as water and atmospheric 02. But the difficult part about these resources is that we have to transform them in a certain way so it can be used for humans. We would have to extract the water from the rich soil using a tool, therefore this would be our water source. We would also have to bring some sort of greenhouse so we could grow plants and give off mor... ... Viking 2 was also a orbiter and a lander that reached Mars August 1976, both were very successful and sent back many of images.The Pathfinder orbiter reached Mars July 1997 and lasted for total of 3 months, its major discoveries were measuring the atmosphere of Mars.The Sojourner was the brother of the Pathfinder but it was a rover. It reached Mars July 1997 , and had many discoveries of investigating of Mars soil and rocks. The Spirit lander landed on Mars in January 2004 using its air bag system. It was the longest successful rover as of yet lasting about 6 years . Opportunity rover is the sister to Spirit, which landed January 2004 and lasted for around 4 years, its main mission was to explore the Martian environment. Phoenix reached Mars on May 2008 near the north pole, and analyzed the soil receiving images and data, and with the major discovery of water ice.

Irc, Cva and Var †New Methods in Basel Essay

I. Introduction Last financial crisis was seen as a strong slap on the global economy. It has awakened Basel Committee on Banking Supervision (BCBS) about the importance of an aggregation between market and credit risks that banks have to cope with. In accordance with Saunders and Cornett (2011), definition of market risk is â€Å"the risk related to the uncertainty of an FI’s (financial institution) earnings on its trading portfolio caused by changes, and particularly extreme changes, in market conditions†. Interest rate risk and foreign exchange risk are some typical example for market risks (Saunders and Cornett, 2011). Meanwhile, credit risk is defined as risk increased when borrowers, bond issuers and counterparties in derivatives transaction may default (Hull, 2010). According to Madigan (2010), it would be greater risks when credit and market risks associated than the sum of individual factors. Therefore, it might lead to worse impacts to banks’ operations. From the crisis’s consequences, Nout Wellink – chairman of the Basel Committee believes that it is necessary for supervisors to learn experiences from recent events, thus set up new methods for banks to cope with fore problems (Ferry, 2008). These new rules which are reflected in Basel III support each other to efficiently measure and manage correlated risks, thus calculate capital requirement to cover these risks. A report by Goeth (2010) defines Basel III as an extensive set of measures reformed in order to enhance the regulation, supervision and risk management in terms of banking. This report mentions new methods with their strengths, weaknesses and effectiveness to help banks control and measure risks effectively, especially combination of credit and market risks. They are incremental risk charge (IRC), credit valuation adjustment (CVA) and stresses value at risk (VAR) model. II. Incremental Risk Charge – IRC 1. Strengths of Incremental Risk Charge Model In order to avoid crisis, banks must satisfy capital requirement demanded by Basel Committee to cover individual as well as correlated risks. IRC is a method which helps banks to estimate minimum capital needed to cover risks from unsecuritised credit instruments caused by default and migration events (BCBS, 2009b). It means IRC model calculates the maximum risks in the worst case when banks cannot securitise any products. As a result, banks have to set up the suitable capital for their own business and make sure that they can overcome difficulties even in the worst situation. In other words, banks will be safe from default and migration events, and more importantly, they can avoid crisis by using IRC model. In Basel III, with IRC model, risks can be measured for a one-year capital horizon at 99.9% confidence level, instead of a 10-day VAR at the 99% confidence level as in Basel II (Davidson, 2009). The extension of capital horizon is one of IRC’s strengths because it can evaluate and calculate  banks’ risks more effectively and accurately than 10-day VAR. The reason is one-day or 10-day VAR cannot comprise completely large cumulative price variation occurring several weeks or months as well as large daily losses which only happen two or three times per year (BCBS, 2009b). As a result, one-year horizon is the optimal time for banks to rebalance their capital. 2. Weaknesses of Incremental Risk Charge Model Under BCBS’s approval, banks are expected to improve their own IRC models to calculate risks for individual positions or sets of positions (BCBS, 2009b). It means the Committee hopes banks will have their own choice of liquidity horizon which is appropriate with their business without any issued industry benchmarks or standards (Stretton, 2011). However, it leads to inconsistence within banking system. Furthermore, supervisors have to face with more difficulties in process of evaluating banks’ IRC model. Although IRC helps bank to capture risks more effectively, especially when market and credit risks collide, there is a significant weakness still be existing. It is the overlap of counterparty credit risk cooperated with over the counters (OTC) and repo-style transactions between IRC and CVA (Stretton, 2011). As a consequence, it will lead to duplicate capital charge for the banks. Suggested by Linsz (2010) – the corporate Treasurer of Bank of America, the Committee should apply an integrated approach to combine the overlapping risks by deleting the risk above in IRC model, hence build up more accurate capital charge for banks. In fact, Bank of America thinks duplicated capital charge is inappropriate with risk management practices (Linsz, 2010). 3. Effectiveness of Incremental Risk Charge Model According to BCBS (2009b), IRC model mainly compounds two types of risks: default risk and credit migration risk. The origin of default risks can be obligors’ default and/or default events. As a result, it may lead to direct losses and/or indirect losses respectively. Meanwhile, credit migration risks may come from internal or external rating downgrade or upgrade as well as credit migration events (BCBS, 2009b). A study by Kealhofer et al. (1998) and Kealhofer (2003) (cited in Varotto,  2011), there are two main methods applied to rate company’s performance which are Through The Cycle (TTC) rating and Point In Time (PIT) rating. Both two rating methods are used to evaluate repay ability of a business, thus bank sets up its own capital to cover risks in case of the business’s default. Nevertheless, there are several differences between TTC and PIT ratings are as follows. While TTC rating tries to achieve stable rating which is not influenced by economic variation over mid-term or long-term, PIT rating reflects changes of the market as well as credit migration through the credit rating in a short-term. A study by Benford and Nier (2007) found that banks prefer to use PIT rating because it can update market variations and reflect them through enterprise’s credit rating downgrade or upgrade more effectively. In other words, IRC model which is used to estimate capital requi rement for banks based on their risks is influenced by both credit and market risks. III. Credit Valuation Adjustment (CVA) 1. Strengths of Credit Valuation Adjustment A capital charge for credit valuation adjustment (CVA) is a procedure used to calculate capital requirement for mark to market losses associated with counterparties’ decreased creditworthiness (BCBS, 2011b). Compare with the traditional method, CVA is more dynamic because it allows a bank or a financial institution to have trading opportunities with large exposures that excel limits set up to oppose future risks – the thing that the traditional method does not permit (Algorithmics, 2009). In fact, based on high risk, high return theory, banks have chance to increase their profit by the trading opportunities as above. Therefore, applying CVA approach instead of the traditional one may help banks achieve much profit. 2. Weaknesses of Credit Valuation Adjustment When banks apply CVA approach, they have to face with a difficulty which is seen as weakness of CVA. It is banks cannot identify and evaluate counterparty’s credit rating accurately (Cameron, 2011). One of the reasons of this disadvantage is derivatives which are originally purchased between bank and counterparty can be transferred to the third party, then fourth party and so on†¦ As a consequence, the bank cannot control its  counterparties effectively, thus it will lead to bank’s incorrect rating counterparty. Another reason might be mistakes of rating agencies because they do not have enough information about banks’ counterparty. Therefore, it will cause inaccurate risk measure when applying CVA approach. In addition, a report undertaken in this area (Cameron, 2011) shows that there are some participants found CVA’s structuring is sophisticated to apply in several real situations. The dealer proves that there still be existing a lot of pitfalls and problems through the calculating risk process. As a consequence, it might lead to many difficulties for banks in using CVA. 3. Effectiveness of Credit Valuation Adjustment A study by Barus et al. (2010) found that CVA approach uses one-year market risk horizon instead of 10-day. It is the same horizon with model as well as VAR models; therefore it helps banks manage risks easier based on integrated time horizon between risks controlling models. In addition, BCBS (2011b) states that CVA capital charge includes charge for mark to market losses and counterparty’s devaluation in creditworthiness. If banks purchase securities at current time, then their market price decreases, banks will take an expenditure called mark to market losses. CVA captures these risks above means it covers market risk might occur to the banks. In fact, within the last crisis, only one-third of counterparty credit risks were due to actual defaults while the remaining two-thirds caused by CVA losses, especially mark-to-market losses (Goeth, 2010). As mentioned above, CVA also captures risk of counterparty’s devaluation in creditworthiness. According to BCBS (2011a), creditworthiness mentions ability to repay or meet debt obligation of an individual or an enterprise. Therefore, when the counterparty’s repay ability deteriorates, it will lead to increasing of CVA capital charge for banks (Bushnell, 2007) in order to help banks prepare an adequate capital. Put differently, CVA not only captures market risks but also cover credit risks that banks have to face with. As a result, CVA and IRC model associate and support each other to help banks measure and manage combination of market and credit risks more  completely effectively. IV. Stressed VAR 1. Strengths of Stressed VAR Model According to Butler (1999), VAR is defined as calculation used to measure â€Å"the worst expected loss that an institution can suffer over a given time interval under normal market conditions at a given confidence level.† After the crisis in the year 2007, Basel Committee realised that market condition is not always consistent. Therefore, stressed VAR was created to compute VAR which would be performed on the present portfolio of a bank in case that the related market elements were going through a stressed period (BCBS, 2009a). Based on VAR calculated, banks are required to have an appropriate amount of capital to cover their worst expected loss. One of VAR charge’s strengths is it reduces the pro-cyclical capital which are disadvantages for the banks. As stated by Christopher Finger (cited in Pengelly, 2011), recent data used for calculating VAR moved around and around, and it might lead to bad aggregation of more volatile markets, dealers’ losses and enlarged capital. 2. Weaknesses of Stressed VAR Model The weaknesses that can be easily seen in stressed VAR model is stressed VAR cannot capture migration and default risks of banks. That is the reason why banks also have to apply IRC model to capture these risks. Furthermore, stressed VAR also cannot cover mark-to-market losses which need to be measured by CVA approach. Therefore, banks have to cope with more complexity in risk measure; as a consequence, banks can make more mistakes in calculating risk process. One more important point is stressed VAR is not able to measure risk in a normal market condition, thus banks need to use one more different model – normal VAR calculation to measure this type of risk. Consequently, it will require really careful and complicated risk management system in order to measure risk accurately. 3. Effectiveness of Stressed VAR Model In accordance with BCBS (2011c), the effectiveness of stressed VAR model is performed through it can include all risks, for instance interest rate risk,  commodity risk, etc. over a period of stressed market that banks recently experienced. In other words, the more types of risks stressed VAR can cover, the more accurately banks can measure and manage risks. From the stressed VAR’s definition mentioned above, BCBS suggested that â€Å"it should be based on the 10-day, 99th percentile, one-tailed confidence interval VAR measure of the current portfolio, with model inputs calibrated to historical data from a continuous 12-month period of significant financial stress relevant to the bank’s portfolio.† It means stressed VAR uses the same time horizon with IRC and CVA in order to help banks reduce mistakes in risk calculating process due to united horizon. Concurrently, the same time horizon also assists supervisors to revise banks’ risks more effectively. Besides, in order to set up an effective risk management method, banks have to use time-series data of 12-continuous-month for stressed VAR model that includes financial stress event which is relevant to banks’ portfolio (BCBS, 2011c). As a result, the financial crisis from 2007 to 2009 is the time period suggested by the Committee to banks to be used for building stressed VAR model. V. Conclusion In Basel III, three new methods above – Incremental Risk Charge, Capital Valuation Adjustment and Stressed Value at Risk – are concurrently used by the banks and they support each other to measure and manage risks more effectively. Strengths of one method are supplementary for others’ weaknesses. That is the reason why banks are required by Basel Committee to add both of three methods into their risk management. With normal VAR model, IRC, CVA and stressed VAR approaches help banks not only control risks as individual factors but also measure and manage risks as a combination, especially the aggregation of credit and market risks more efficiently. From that, banks need to set up their own capital which is appropriate with their financial situation in order to face with difficulties that the financial crisis 2007-2009 was the typical example. Besides undeniable advantages of three new rules, the largest banks in the world, such as Bank of America, UBS, Royal Bank of Scotland, still found  significant weaknesses and gave comment on the Basel Committee on Banking Supervision’s consultative documents. Basel Committee should concern about these recommendations to readjust Basel III in order to set up an accurate and effective regulation documents for international banks to help banks in particular as well as financial institutions in general avoid disasters as the financial crisis happened in 2007 to 2009. VI. References Algorithmics, (2009) Credit Value Adjustment and the changing environment for pricing and managing counterparty risk. [Online]. Available at: http://www.algorithmics.com/EN/media/pdfs/Algo-WP1209-CVASurvey.pdf (Accessed: 02 January 2012) Barus, R., Battaglia, F., Jagannathan, R., Mendis, J., and Onorato, M., (2010) Basel III: What’s new? Business and technological challenges. [Online]. Available at: http://www.algorithmics.com/en/media/pdfs/algo-wp0910-lr-basel3-exd.pdf (Accessed: 02 January 2012) Basel Committee on Banking Supervision, (2009a) Analysis of the trading book quantitative impact study. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2009b) Guidelines for computing capital for incremental risk in the trading book. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2011a) Application of own credit risk adjustments to derivatives. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2011b) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2011c) Interpretive issues with respect to the revisions to the market risk framework. Bank for International Settlements. Basel. Benford, J. & Nier, E. (2007) Monitoring cyclicality of Basel II capital requirements. [Online]. Available at: http://www.bankofengland.co.uk/publications/fsr/fs_paper03.pdf (Accessed: 28 December 2011) Bushnell, C. D. (2007) Detailed Comments on Market Risk NPR’. [Online]. Available at: http://www.federalreserve.gov/SECRS/2007/February/20070213/R-1266/R-1266_17_1.pdf (Accessed: 06 January 2012) Butler, C. (1999) Mastering value at risk: a step-by-step guide to understanding and applying VAR. London: Financial Times/Prentice Hall. Cameron, M. (2011) ‘Securitising CVA’, Risk, 24(2), p. 29. Davidson, C. (2009) ‘Urgency and uncertainty’, Risk, 22(4), p. 72. Ferry, J. (2008) ‘Wary of the IRC’, Risk, 21(9), p. 26. Goeth, P. (2010) Basel III – Design and Potential Impact. [Online]. Available at: http://www.garp.org/media/529782/basel%20iii_goeth112410.pdf (Accessed: 28 December 2011) Hull, C. J. (2010) Risk management and financial institutions. Boston, MA Harlow: Pearson Education. Linsz, D. M. (2010) Basel Committee on Banking Supervision, Consultative Document â€Å"Strengthening the Resilient of Banking Sector†. [Online]. Available at: http://www.bis.org/publ/bcbs165/boac.pdf (Accessed: 28 December 2011) Madigan, P. (2010) When market and credit risk collide. [Online]. Available at: Available at: http://www.risk.net/risk-magazine/feature/1652766/when-market-credit-risk-collide (Accessed: 03 January 2012) Pengelly, M. (2011) Stressed VAR questioned by risk managers. [Online]. Available at: http://webcache.googleusercontent.com/search?q=cache:8Hl5fareW-UJ:www.risk.net/risk-magazine/news/2024562/stressed-var-questioned-risk-managers+Stressed+VAR+questioned+by+risk+managers&cd=1&hl=en&ct=clnk&gl=uk (Accessed: 28 December 2011)

Cost Control and Cost Reduction

PRINCIPLES OF COST CONTROL 1. 1 Introduction Cost is important to all industry. Costs can be divided into two general classes; absolute costs and relative costs. Absolute cost measures the loss in value of assets. Relative cost involves a comparison between the chosen course of action and the course of action that was rejected. This cost of the alternative action – the action not taken – is often called the â€Å"opportunity cost†. The accountant is primarily concerned with the absolute cost.However, the forest engineer, the planner, the manager needs to be concerned with the alternative cost – the cost of the lost opportunity. Management has to be able to make comparisons between the policy that should be chosen and the policy that should be rejected. Such comparisons require the ability to predict costs, rather than merely record costs. Cost data are, of course, essential to the technique of cost prediction. However, the form in which much cost data are recorded limits accurate cost prediction to the field of comparable situations only.This limitation of accurate cost prediction may not be serious in industries where the production environment changes little from month to month or year to year. In harvesting, however, identical production situations are the exception rather than the rule. Unless the cost data are broken down and recorded as unit costs, and correlated with the factors that control their values, they are of little use in deciding between alternative procedures. Here, the approach to the problem of useful cost data is that of identification, isolation, and control of the factors affecting cost. . 2 Basic Classification of Costs Costs are divided into two types: variable costs, and fixed costs. Variable costs vary per unit of production. For example, they may be the cost per cubic meter of wood yarded, per cubic meter of dirt excavated, etc. Fixed costs, on the other hand, are incurred only once and as additional units of production are produced, the unit costs fall. Examples of fixed costs would be equipment move-in costs and road access costs. 1. 3 Total Cost and Unit-Cost Formulas As harvesting operations become more complicated and involve both fixed and ariable costs, there usually is more than one way to accomplish a given task. It may be possible to change the quantity of one or both types of cost, and thus to arrive at a minimum total cost. Mathematically, the relationship existing between volume of production and costs can be expressed by the following equations: Total cost = fixed cost + variable cost ? output In symbols using the first letters of the cost elements and N for the output or number of units of production, these simple formulas are C = F + NV UC = F/N + V 1. Breakeven Analysis A breakeven analysis determines the point at which one method becomes superior to another method of accomplishing some task or objective. Breakeven analysis is a common and important part of cost cont rol. One illustration of a breakeven analysis would be to compare two methods of road construction for a road that involves a limited amount of cut-and-fill earthwork. It would be possible to do the earthwork by hand or by bulldozer. If the manual method were adopted, the fixed costs would be low or non-existent.Payment would be done on a daily basis and would call for direct supervision by a foreman. The cost would be calculated by estimating the time required and multiplying this time by the average wages of the men employed. The men could also be paid on a piece-work basis. Alternatively, this work could be done by a bulldozer which would have to be moved in from another site. Let us assume that the cost of the hand labor would be $0. 60 per cubic meter and the bulldozer would cost $0. 40 per cubic meter and would require $100 to move in from another site.The move-in cost for the bulldozer is a fixed cost, and is independent of the quantity of the earthwork handled. If the bulldo zer is used, no economy will result unless the amount of earthwork is sufficient to carry the fixed cost plus the direct cost of the bulldozer operation. Figure 1. 1 Breakeven Example for Excavation. If, on a set of coordinates, cost in dollars is plotted on the vertical axis and units of production on the horizontal axis, we can indicate fixed cost for any process by a horizontal line parallel to the x-axis. If variable ost per unit output is constant, then the total cost for any number of units of production will be the sum of the fixed cost and the variable cost multiplied by the number of units of production, or F + NV. If the cost data for two processes or methods, one of which has a higher variable cost, but lower fixed cost than the other are plotted on the same graph, the total cost lines will intersect at some point. At this point the levels of production and total cost are the same. This point is known as the â€Å"breakeven† point, since at this level one method is as economical as the other.Referring to Figure 1. 1 the breakeven point at which quantity the bulldozer alternative and the manual labor alternative become equal is at 500 cubic meters. We could have found this same result algebraically by writing F + NV = F' + NV' where F and V are the fixed and variable costs for the manual method, and F' and V' are the corresponding values for the bulldozer method. Since all values are known except N, we can solve for N using the formula N = (F' – F) / (V – V') 1. 5 Minimum Cost Analyses A similar, but different problem is the determination of the point of minimum total cost.Instead of balancing two methods with different fixed and variable costs, the aim is to bring the sum of two costs to a minimum. We will assume a clearing crew of 20 men is clearing road right-of-way and the following facts are available: 1. Men are paid at the rate of $0. 40 per hour. 2. Time is measured from the time of leaving camp to the time of return. 3. Total walking time per man is increasing at the rate of 15 minutes per day. 4. The cost to move the camp is $50. If the camp is moved each day, no time is lost walking, but the camp cost is $50 per day.If the camp is not moved, on the second day 15 crew-minutes are lost or $2. 00. On the third day, the total walking time has increased 30 minutes, the fourth day, 45 minutes, and so on. How often should the camp be moved assuming all other things are equal? We could derive an algebraic expression using the sum of an arithmetic series if we wanted to solve this problem a number of times, but for demonstration purposes we can simply calculate the average total camp cost. The average total camp cost is the sum of the average daily cost of walking time plus the average daily cost of moving camp.If we moved camp each day, then average daily cost of walking time would be zero and the cost of moving camp would be $50. 00. If we moved the camp every other day, the cost of walking time is $2. 00 lost the second day, or an average of $1. 00 per day. The average daily cost of moving camp is $50 divided by 2 or $25. 00. The average total camp cost is then $26. 00. If we continued this process for various numbers of days the camp remains in location, we would obtain the results in Table 1. 1. TABLE 1. 1 Average daily total camp cost as the sum of the cost of walking time plus the cost of moving camp.Days camp remained in location| Average daily cost of walking time| Average daily cost of moving camp| Average total camp cost| 1| 0. 00| 50. 00| 50. 00| 2| 1. 00| 25. 00| 26. 00| 3| 2. 00| 16. 67| 18. 67| 4| 3. 00| 12. 50| 15. 50| 5| 4. 00| 10. 00| 14. 00| 6| 5. 00| 8. 33| 13. 33| 7| 6. 00| 7. 14| 13. 14| 8| 7. 00| 6. 25| 13. 25| 9| 8. 00| 5. 56| 13. 56| 10| 9. 00| 5. 00| 14. 00| We see the average daily cost of walking time increasing linearly and the average cost of moving camp decreasing as the number of days the camp remains in one location increases.The minimum cost is obta ined for leaving the camp in location 7 days (Figure 1. 2). This minimum cost point should only be used as a guideline as all other things are rarely equal. An important output of the analysis is the sensitivity of the total cost to deviations from the minimum cost point. In this example, the total cost changes slowly between 5 and 10 days. Often, other considerations which may be difficult to quantify will affect the decision. In Section 2, we discuss balancing road costs against skidding costs.Sometimes roads are spaced more closely together than that indicated by the point of minimum total cost if excess road construction capacity is available. In this case the goal may be to reduce the risk of disrupting skidding production because of poor weather or equipment availability. Alternatively, we may choose to space roads farther apart to reduce environmental impacts. Due to the usually flat nature of the total cost curve, the increase in total cost is often small over a wide range o f road spacings. Figure 1. 2 Costs for Camp Location Example.