Tag: Transaction

Transaction | Glossary

Karan Negi Leave a comment

Definition

A Transaction (or Transaction Cost) is the overhead cost (or fixed cost) of executing each and every item in a batch is known as a Transaction cost. It’s one of the two overall costs that determines the economic batch size in a U-curve optimization.

The Agile method emphasizes the reduction of transaction costs over the development period of new and innovative IT products. They are generally found to be lower in the Agile Development Process, than in the traditional ones.

Further Reading

  • “Transaction Cost Management : Strategies and Practices for a Global Open Economy” (book) by Chihiro Suematsu.

U-curve optimization | Glossary

Karan Negi Leave a comment

Definition

U-curve optimization is used in determining the optimal batch size. It is done by balancing transaction cost and holding cost. It is illustrated by a graph that displayes three qualities, namely: Transaction Cost, Holding Cost and Total Cost. The y-axis represents cost, and the x-axis is batch size. By adding together the Transaction Cost and Holding Cost for a batch size, we can calculate the Total Cost. The goal overall is to determine the lowest possible Total Cost.

Further Reading

  • “Determination of Optimal Batch Size for a Manufacturing System”(book), by Ruhul Sarker and Charles Newton.
  • For more on U-curve optimization , read here and  here.