Notes on operations: determining the average cost of a book for allocation formulas. Comparing options

Academic libraries that use allocation formulas to divide monographic funds among academic departments frequently include the average cost of books per discipline as a variable. Published price indices provide average costs for some subjects, but for libraries serving interdisciplinary departments, purchasing nonbook materials with monographic funds, or purchasing foreign language materials, the published price indices may prove insufficient. This study investigates methods of determining average prices to be used in allocation formulas. As part of evaluating the allocation formula at Mississippi State University, the authors reviewed literature pertinent to library use of allocation formulas, surveyed Carnegie Doctoral/ Research Extensive land grant university libraries on their use of average price as a variable in allocation formulas, and calculated allocations using average price data from four sources: The Bowker Annual, previous acquisition cost data, Blackwell Price Reports, and Blackwell approval plan profiles. The pros and cons of each method of determining average price are discussed. ********** Some academic libraries consider an 'allocation formula helpful in equitably distributing budgetary resources for materials purchases and seek to include formula variables that reflect the needs and interests of the disciplines or departments among which the resources are divided. Many such libraries use the average cost of books per discipline as one of the factors in the formula. The price variable is used as a proportion, to give departments with relatively expensive titles a larger share of the available dollars than departments with relatively inexpensive titles. If all other variables in the formula are equal, the price variable will allow the library to purchase the same number of titles per department, even though one department's titles tend to be much more expensive than another department's titles. Mississippi State University (MSU) Libraries use an allocation formula to allocate funds for monographic purchases, and that formula historically included use of average price data from The Bowker Annual: Library and Book Trade Almanac (Bowker). (1) The current study began with the concern that the method MSU used for determining average price data was inadequate because the source data did not match the university's departmental structures well and did not address interdisciplinary materials, nonbook formats, or titles in languages other than English. The authors surveyed similar libraries on their use of average price as a variable in allocation formulas and calculated allocations using average price data from four sources to answer three research questions. First, what methods do libraries at similar institutions use to determine average price data for allocation formulas? Second, to what extent do average book prices derived from Bowker correlate with other data sources? Third, what are the pros and cons of each method of calculating average price? The authors conducted a literature survey to determine historical and current thinking regarding use of allocation formulas and the value of including price data in such formulas. Similar libraries were surveyed on their use of average price as a variable in allocation formulas. Finally, the authors calculated allocations using average price data from four sources and evaluated the pros and cons of each method. Background MSU Libraries have historically allocated a portion of the funding available for monographic purchases to the university's academic departments. Selection of materials for each department's funds was made by departmental faculty and the librarian assigned as liaison to the department. Until 1992, allocations were made based on historical spending patterns with occasional adjustments to support new programs and accreditation needs. In 1992, the library faculty, in consultation with the University Library Committee, decided to implement a fund allocation formula using eight variables: undergraduate credit hours, undergraduate majors, graduate credit hours, graduate majors, average cost of book in discipline, publishing output, relative importance of books and serials, and local use. …