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- Title
Deciding product mix based on time-driven activity-based costing by mixed integer programming.
- Authors
Zhuang, Zheng-Yun; Chang, Shu-Chin
- Abstract
To determine a product mix for a production process, this study proposes a mixed-integer programming (MIP) model, based on the time-driven activity-based costing (TDABC) accounting system. By using a time driver from the resource to the cost objects and simultaneously dealing with numerous resource limitations, the model obtains a global optimal decision. The model highlights the difference between supply and the use of the capacity. It avoids some possible limitations of the programming modeling approach when theory of constraints (TOC) or activity-based-costing (ABC) is used. The model is illustrated using a numerical example. In the form of a budgeted income statement, the results for the formulated MIP models that use TOC, ABC and TDABC are compared, in terms of resource-used-based profit, resource-supplied-based profit and cash flow. The proposed MIP model that uses TDABC is shown to support a product mix decision, on which studies of TDABC seldom focus. Implications for the use of this accounting system adoption to determine product-mix are detailed.
- Subjects
INTEGER programming; PRODUCT mixes; THEORY of constraints; ACTIVITY-based costing; DECISION making
- Publication
Journal of Intelligent Manufacturing, 2017, Vol 28, Issue 4, p959
- ISSN
0956-5515
- Publication type
Article
- DOI
10.1007/s10845-014-1032-2