Incremental Value Analysis and Opportunity Cost of Time and Resources

2. Incremental Value Analysis
Incremental Cost Analysis will be used to determine the value of each business decision that will be taken in the course of doing the business. Incremental costs will be important in computing the optimal cost associated with either gaining or losing a single laundry operator. Since the business model is built upon a laundry service tracking application, it will be important to maintain a database of potential suppliers who in this case will be laundry operators. Thus incremental cost analysis will help determine the long term impact of adding one operator to the business application. Thus incremental value analysis will be used to determine the impact of either gaining or losing a laundry operator on the business revenue. Since the business operates on an agency model, it will be essential to determine the cost of gaining or losing a supplier (laundry operator) or a client (student client) and the subsequent impact on the business bottom-line. The process of incremental revenue analysis will encompass calculating the opportunity cost of time and resources.
2.1 Opportunity Cost of Time
Opportunity cost of time will involve calculating the amounts of time spend in developing and running the laundry service application up to breakeven point. Incremental revenue analysis determines the impact of demand and cost on revenue generation. The students in need of washing services will represent the demand side while the laundry operators will constitute the supply side of the business. Determining a breakeven point by balancing demand and supply will be pivotal to the business success. Therefore the number of customers and suppliers required for the business to breakeven and make profit without increasin...