Application of discrete event simulation to the activity based costing of manufacturing systems
RIS ID
57750
Abstract
In the last two decades traditional cost accounting practices have been unable to respond to the changing information needs of manufacturing management. Activity Based Costing (ABC) is a method which can solve many of the limitations of traditional cost systems. This method of accounting involves the breaking down of the individual activities and costing of the amount of time spent on each step of the manufacture of a product. This paper illustrates how Discrete Event Simulation may be used to evaluate the ABC of a manufacturing system. A visual interactive simulation software WITNESS is used to model a semi-automated Printed Circuit Board (PCB) assembly line. The PCB assembly line case study demonstrates how ABC can be applied to a manufacturing system using simulation modelling techniques. The paper also discusses further applications of ABC in the manufacturing environment and includes a case study on the operational quality cost.
Publication Details
Spedding, T. A. & Sun, G. Q. (1999). Application of discrete event simulation to the activity based costing of manufacturing systems. International Journal of Production Economics, 58 (3), 289-301.