| September 29, 2018

CASE 9 8/13/13 CAMBRIDGE TRANSPLANT CENTER Marginal Cost Pricing Analysis This case analyzes a relatively straightforward marginal cost pricing analysis. It is designed to illustrate the mechanics of estimating marginal costs as well as the advantages and disadvantages of using marginal costs as the basis for pricing transplant services. The input section of the worksheet contains historical average cost data for seven cost categories along with the fixed cost proportion and growth percentage for applicable categories. The output is the marginal (variable) cost for Phase 4 of the transplant program as well as the Phase 4 cost structure. The model consists of a complete base case analysis–no changes need to be made to the existing MODEL-GENERATED DATA section. However, all values in the student version INPUT DATA section have been replaced with zeros (or dashes). Thus, students must determine the appropriate input values and enter them into the model. These cells are colored red. When this is done, any error cells will be corrected and the base case solution will appear. Students will have to modify the model as required by the case as well create their own graphics (charts) as needed to present their results.

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