1. By Dara Leet Jay Prasad Saneeya Islam Jorge Mendez Ravin Sangar
CostBenefit Studies By
Dara Leet
Jay Prasad
Saneeya Islam
Jorge Mendez
Ravin Sangar

2. Objectives What is a cost benefit study? Why is it important?
Overview of cost benefit studies
Example of a cost benefit study: objectives, methods, results, conclusions

3. Cost Benefit Studies
A cost benefit study is a quick and simple technique that can be used to analyze the financial decisions that are related to potential changes in a business/organization.
Purpose:
To determine if an investment/decision is sound
To provide a basis for comparing alternatives
A cost-benefit analysis is a quick and simple technique that can be used to analyze the financial decisions that are related to potential changes in a business or organization. It involves a methodical method for estimating the strengths and weaknesses of substitutions that can satisfy transactions, activities or functional requirements of a business. It’s used to determine what options provide the best alternative in terms of benefits in labor, time, cost savings, etc.
The purpose of a cost-benefit analysis is to determine if an investment/decision is sound. It provide a basis for comparing alternatives by estimating the total expected cost of each option against the total expected benefits. These numbers are then used to see whether the benefits outweigh the costs, and by how much.

4. Importance of a Cost Benefit Study
Relatively simple framework to determine most profitable course of action
Assist with decision of whether to hire new team member(s)
Selection between projects when funds are limited
Evaluation of new project
Determine feasibility of purchases
Keep in mind this is intended to be used for quick and simple financial decisions
There are better models for more complex, high-cost decisions
For profit of enterprise you would ideally make decisions that result in excess social benefit over cause….benefits > losses

5. Overview of CBS Method Brainstorm costs and benefits
Assign monetary value to costs
Assign monetary value to benefits
Compare costs to benefits
Consider payback period
Any unexpected costs? Benefits that you may not have initially anticipated? Cumulative costs/benefits over lifetime of project?
2.) Costs include physical resources needed to complete the project + cost of human effort. Training costs? Decrease in productivity while learning new technology? More team members?
3.) this is less straightforward and more difficult to do. Often intangible benefits such as employee/customer satisfaction; impact on health and/or safety; how to assign monetary value to that?
4.) Payback period is the time it takes to reach the break-even point, or the point at which the benefits have just repaid the costs

6. Example: Pharmacy Robotic Dispensing
Objectives:
Increase efficiency/accuracy in a Practical Pharmacy
Methods:
Purchase pharmacy robotic dispensing
Train staff
Reduce payroll
Results
Increase sales & net profit
Improve customer service
Conclusion
Benefits outweigh the cost
Must have a high demand of scripts
Need backup staff for technical issues with equipment

7. Cost Benefit Estimation and Comparison
Efficiency: 50 scripts a day more, 300 days open, $50 a script, 75% is drug cost & 25% margin of profit, ends up with $187,500.
Payroll: $12 * 40hours * 52week = $25,000 then rounded to $30,000.
Tot Benefit - Tot Cost = $115,900

8. To Purchase, Or Not To Purchase?
Total cost for one year: $101,600
Repeating yearly costs:
Additional Training ($100 /staff member)
Yearly Maintenance ($800)
Total benefit for one year: $217,500
Cost of improvement will be paid for within one year with profits also being made within one year

9. Summary
Cost benefit study - technique used to assess financial decisions based on costs and benefits of implementing a change in a business or organization
Overview of method
Application to pharmacy setting
Automated dispensing vs. new employee

10. References
Available at: Accessed October 27,
Available at: Accessed October 27,
Wolfram C. Cost Benefit Studies. Harvard Electricity Policy Group. Available at: Accessed October 27, 2015.

11. THANK YOU