Deciding product mix based on time-driven activity-based costing by mixed integer programming

Zheng Yun Zhuang, Shu Chin Chang

Research output: Contribution to journalArticle

13 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)959-974
Number of pages16
JournalJournal of Intelligent Manufacturing
Volume28
Issue number4
DOIs
Publication statusPublished - Apr 1 2017
Externally publishedYes

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Keywords

  • Activity-based costing (ABC)
  • Integer programming
  • Product mix
  • Theory of constraints (TOC)
  • Time-driven activity-based costing (TDABC)

ASJC Scopus subject areas

  • Software
  • Industrial and Manufacturing Engineering
  • Artificial Intelligence

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