An evaluation of alternative cost variance investigation models

The evaluation of alternative cost variance investigation models has received considerable attention in the past decade. In previous studies, only two types of investigation action have been considered: (1) full investigation, which assumes the acquisition of perfect information regarding an operation, and (2) no investigation. No previous study has considered a partial investigation as an alternative action. Due to time and budget constraints, decision makers may often be interested in only a partial investigation. Therefore, a need arises to incorporate a partial investigative action into the cost variance investigation models when their performances are compared and evaluated. This study is directed toward the examination of the effects of allowing a partial investigative action in the evaluation of four cost variance investigation models. To accomplish this purpose, two distinct decision rules are applied to each model: (a) the conventional decision rule, which allows only two types of investigative action (no or full investigation), and (b) the proposed decision rule, which allows three types of investigative action (no, full, or partial investigation). There are two major objectives of this study: (1) For each model, compare the relative performance of the proposed rule and conventional decision rule (the intra-model comparison); (2) Compare the performance of the four models under the proposed decision rule and compare the performance of the four models under the conventional decision rule (the inter-model comparison). The models selected for this study are: (1) the Simple Control Chart Model, (2) the Markovian Control Model, (3) the Decision Theory Model, and (4) the Dynamic Programming Model. [...]