Talk:Equivalence number method

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Notability discussion[edit]

The method is used for allocation, e.g. cost allocation, since decades based on the principle of proportionality. So, it is notable especially in the field of joint production, where you have several co-products and you have to find a way how to distribute the input costs on the different output streams. So far, I have only cited a German text book which I used back then during my studies. Maybe my chosen translation is not correct, and another word is better. But nevertheless, this is a common method to distribute an input stream (costs, emissions, primary energy, etc.) according to equivalent numbers (e.g. the mass, the space area, the volume, the energy content, the exergy content, etc.). According to these equivalent numbers, all of the product streams receive a weighting factor. E.g. if I want to allocate the fuel in combined heat and power production, then the exergy content of the electricity is 1 whereas at a given temperature of e.g. 150°C the exergy content of heat is 0,35. So these are the weighting figures with which the output is settled. If you know a better more precise English word for "equivalence number method" after having understood what it does, please tell me - then we can move the article to another lemma. --Gunnar (talk) 11:04, 23 July 2018 (UTC)[reply]

A Google Book search does suggest that the term "equivalent number" is commonly used in accounting textbooks suggesting it is a real phrase in the field. Perhaps move to that term? This page could use better citations but it does appear to be a legitimate term from what I see. Best, Barkeep49 (talk) 16:42, 23 July 2018 (UTC)[reply]

My preferred online DE-EN-dictionary translates "Äquivalenzziffer" into "equivalence number", that was the simple reason I choose this word when translating the article. And there is a REN = ringer equivalence number. Another synonym may be "weighting figure". In cost accounting many hits come from SAP - so maybe a single German manual writer/translator choose a not very precise term, and there is a better English expression. Therefore let's collect the pros and cons and wait for the contribution of some cost allocation experts for joint production. --Gunnar (talk) 18:38, 23 July 2018 (UTC)[reply]

Here is a dictionary entry, opting for "equivalence number calculation" [1]. --Gunnar (talk) 23:38, 23 November 2019 (UTC)[reply]

No concerns with the PROD removal; I'm not going to AfD this until it's clear what name this is referred to in English (and a reference check for that). The article Cost allocation (which is on a wider topic) is incomplete to the point of being of no assistance here. power~enwiki (π, ν) 19:08, 23 July 2018 (UTC)[reply]

Principle of equivalence numbers / equivalent numbers[edit]

Maybe I should explain here the method a little bit more in depth with some examples. A new appartment house is built with 12 flats, and all have a different sizes but the sum of all is 1000 m². The paviour sends an invoice about 120.000 ¥€$ for the terracotta tiles and the labour. What to do? Each flat receives a 1/12 of the bill? Maybe we share the costs by the number of inhabitants: some apartments are bought by a single persons, some are DINKS, and a few families with 4-5 persons will move in. No, in most cases you would say that a fair cost allocation is by living space. Although smaller rooms are more difficult to tile, in general we can assume that the costs are proportional to the size of the flat. So each flat is measured by the floor space - this is the output of 12 flats with A_i as living area = equivalency/equivalent number. In the end a share of the invoice is allocated to each apartment so that the allocation factor a_i equals A_i/sum_i=1-12 (A_i).

Or: In a brewery you like to know what the filling process at the beer carousel does cost. Let's assume that the machine is flexible and can process bottles with 0,2 l, 0,33 l and 0,5 l. Nevertheless the filling speed is restricted to 200 ml/s per nozzle, and at the end of the year you have produced 13.000 m³ beer of which there are 6 million 0,5-bottles, 24 million 0,33-bottles and 10 million 0,2-bottles. What are the costs of the filling process for each bottle type? The equivalency/equivalent number is in this case the filling time: 1s; 1,66s and 2,5s. You take the cumulated costs K_sum of the bottling plant during that year and use (10M*1s + 24M*1,66s + 6M*2,5s) as denominator and each of the three product (in Ms) as numerator. E.g. the large 0,5-bottles receive then a cost allocation a_0,5 = 6M*2,5s / (10M*1s + 24M*1,66s + 6M*2,5s). The cost contribution is a_0,5 * K_sum, and if you divide by 6 millions, then you have the per bottle figure. --Gunnar (talk) 20:22, 23 July 2018 (UTC)[reply]

Here is another description from a lexicon on economics and a second description (Google translated). --Gunnar (talk) 20:35, 23 July 2018 (UTC)[reply]

Literature review[edit]

Could anybody from an English academic institution help and add some further reading recommendations? I am a native German speaker and my textbooks back in my study time were German, therefore I am not very familiar with English standard literature on economics & accounting. The equivalence number method or how we may name it slightly different is very common in joint production as explained in the section Equivalence_number_method#Application_examples. --Gunnar (talk) 10:38, 2 September 2018 (UTC)[reply]