Activity-based cost estimation in a push/pull advanced manufacturing system

The objective of this paper is to estimate the manufacturing and product costs by using activity-based costing (ABC) method in an advanced manufacturing system that is run under either material requirements planning (MRP) or just in time (JIT) system. ABC is a method that can overcome many of the limitations of traditional costing systems. This paper reports and discusses the implementation of the ABC alongside a mathematical and simulation model to estimate the manufacturing and product cost in an automated manufacturing system. The potential effects of manufacturing planning and control strategies implemented on financial structure of the manufacturing system are initially analysed. ABC has been used to model the manufacturing and product costs. An extensive analysis has been carried out to calculate the product costs under the two strategies. The comparison of the two strategies in terms of effects on the manufacturing and product costs are carried out to highlight the difference between the two strategies. (C) 2003 Elsevier Science B.V. All rights reserved.