Abstract:
Financial feasibility justifies any business institution from an economic point of view.
Cost analyses and pricing strategies assist in the investigation into the financial
feasibility of an institution, whilst a financial model contributes to the innovation of a
business in order to reach the desired financial feasibility. Financial modeling can be
implemented as a business tool to analyze a business’ reactions to economic events, as
well as to estimate the outcome of financial decisions, prior to any decisions being
implemented. With regards to this project a financial model plays an important role in
quantifying the financial impact of the institution’s policies and current price setting
methodologies.
The Laboratories of the Department of Veterinary Tropical Diseases (DVTD) at the
Faculty of Veterinary Sciences at Onderstepoort, currently provides a service to three
key service categories; the Commercial, Interdepartmental and Research settings.
The laboratories are wholly self-sustainable and generate an income mainly from these
service settings. However, the manner in which the services are charged for are set on
no scientific model or formulations whatsoever. Management is also uninformed
regarding the cost-to-company of the activities and services provided by the
laboratories. This poses a problem as the laboratories are currently fully unaware of
their financial standing and it is unknown whether the laboratories are profitable or
breaking even.
By applying operations, demand, and financial management techniques incorporated
with operations research techniques, an in-depth study of the activities and processes
taking place at these laboratories can be done and as a result a comprehensive
operational, financial and cost analysis will be presented and integrated with a suitable
pricing model to enable the formulation of an appropriate financial model.
