J Korean Diet Assoc.  2000 Feb;6(1):33-43.

Cost, Benefit Analysis of Operation System Change in the Hospital Foodservice

• Kim HM
• Yang IS
• Park EC
• Lim HS

Abstract

Environmental pressures from such sources an economic condition, the government and inter-institutional competition create managerial challenges. Economic pressures may be forcing dietetic dept, in hospital to utilize cost, benefit analysis to assist them in their problem solving. Cost, benefit analysis have been widely used in business, industry and many other fields with only limited application to foodservice. Due to the lack or this information the purposes of this study were to identify use of cost, benefit analysis in hospital foodservice system to evaluate the economic efficiency of alternatives, and to make recommendation for operation system change. Using the cost?benefit method, cash flows are separated into cost and benefits. For an alternative to be selected, indicators, such as NPV, benefit-cost ratio (B/C ratio) with 5% discount rate per annum. The sensitivity analysis was also conducted with difference rate 3%, 7% respectively and reduced employee payroll change. The result of this study can be summarized as follows : 1. The total cost of investment for operation system change was 390,570 thousand won and the total benefit through operation system change was 865,808 thousand won. 2. Net present value(NPV) for 5 years was 475,239 thousand won and benefit-cost ratio was 2.22. 3. In sensitivity analysis with different discount rate 3%, 7%, benefit-cost ratio was 2.25, 2.18 respectively, with total reduced employee payroll change, benefit-cost ratio was 2.86. In conclusion, total benefits were exceeded total costs. Therefore, the project of operation system change in hospital foodservice was found to be economically efficient.

Keyword

cost benefit analysis; discount rate; net present value(NPV); benefit-cost ratio(B/C ratio); sensitivity analysis

MeSH Terms

Commerce
Cost-Benefit Analysis
Investments
Problem Solving