IDEAS home Printed from https://ideas.repec.org/a/prg/jnleam/v2015y2015i4id262.html
   My bibliography  Save this article

Product mix decisions based on ABC and TOC

Author

Listed:
  • Eva Výrostová

Abstract

The decision about a product mix presents a typical problem for manufacturing companies. This paper deals with possible enhancements to operations management by solving the optimal product mix problem while respecting the existing capacities. The main objective is to present a combination of activity-based costing (ABC) and theory of constrains (TOC), which allows the managers to obtain more precise information about the product mix with respect to existing bottlenecks, than would be the case with ABC or TOC alone. The combination of ABC and TOC enhances the decision making process by modelling relevant cost more precisely by using ABC, while simultaneously optimizing the product mix with respecting the existing physical constraints such as production capacity or demand constraints.

Suggested Citation

  • Eva Výrostová, 2015. "Product mix decisions based on ABC and TOC," Ekonomika a Management, Prague University of Economics and Business, vol. 2015(4).
  • Handle: RePEc:prg:jnleam:v:2015:y:2015:i:4:id:262
    as

    Download full text from publisher

    File URL: http://www.vse.cz/eam/download.php?jnl=eam&pdf=262.pdf
    Download Restriction: free of charge

    File URL: http://www.vse.cz/eam/262
    Download Restriction: free of charge
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shapiro, Jeremy F., 1999. "On the connections among activity-based costing, mathematical programming models for analyzing strategic decisions, and the resource-based view of the firm," European Journal of Operational Research, Elsevier, vol. 118(2), pages 295-314, October.
    2. Plenert, Gerhard, 1993. "Optimizing theory of constraints when multiple constrained resources exist," European Journal of Operational Research, Elsevier, vol. 70(1), pages 126-133, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zheng-Yun Zhuang & Shu-Chin Chang, 2017. "Deciding product mix based on time-driven activity-based costing by mixed integer programming," Journal of Intelligent Manufacturing, Springer, vol. 28(4), pages 959-974, April.
    2. Bhattacharya, Arijit & Vasant, Pandian, 2007. "Soft-sensing of level of satisfaction in TOC product-mix decision heuristic using robust fuzzy-LP," European Journal of Operational Research, Elsevier, vol. 177(1), pages 55-70, February.
    3. Wen-Hsien Tsai & Shang-Yu Lai & Chu-Lun Hsieh, 2023. "Exploring the impact of different carbon emission cost models on corporate profitability," Annals of Operations Research, Springer, vol. 322(1), pages 41-74, March.
    4. Mohammad Taleghani, 2017. "Synergistic Role of Balanced Scorecard/Activity Based Costing and Goal Programming Combined Model on Strategic Cost Management," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 586-593.
    5. Kee, Robert & Schmidt, Charles, 2000. "A comparative analysis of utilizing activity-based costing and the theory of constraints for making product-mix decisions," International Journal of Production Economics, Elsevier, vol. 63(1), pages 1-17, January.
    6. Golmohammadi, Davood, 2015. "A study of scheduling under the theory of constraints," International Journal of Production Economics, Elsevier, vol. 165(C), pages 38-50.
    7. Lea, Bih-Ru & Fredendall, Lawrence D., 2002. "The impact of management accounting, product structure, product mix algorithm, and planning horizon on manufacturing performance," International Journal of Production Economics, Elsevier, vol. 79(3), pages 279-299, October.
    8. Z Degraeve & F Roodhooft & B van Doveren, 2005. "The use of total cost of ownership for strategic procurement: a company-wide management information system," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(1), pages 51-59, January.
    9. Ribeiro, M.A. & Silveira, J.L. & Qassim, R.Y., 2007. "Joint optimisation of maintenance and buffer size in a manufacturing system," European Journal of Operational Research, Elsevier, vol. 176(1), pages 405-413, January.
    10. Georgiadis, Michael C. & Tsiakis, Panagiotis & Longinidis, Pantelis & Sofioglou, Maria K., 2011. "Optimal design of supply chain networks under uncertain transient demand variations," Omega, Elsevier, vol. 39(3), pages 254-272, June.
    11. Wen-Hsien Tsai & Shi-Yin Jhong, 2018. "Carbon Emissions Cost Analysis with Activity-Based Costing," Sustainability, MDPI, vol. 10(8), pages 1-26, August.
    12. Pacheco, Diego Augusto de Jesus & Antunes Junior, José Antonio Valle & de Matos, Celso Augusto, 2021. "The constraints of theory: What is the impact of the Theory of Constraints on Operations Strategy?," International Journal of Production Economics, Elsevier, vol. 235(C).
    13. Mansouri, S. Afshin & Golmohammadi, Davood & Miller, Jason, 2019. "The moderating role of master production scheduling method on throughput in job shop systems," International Journal of Production Economics, Elsevier, vol. 216(C), pages 67-80.
    14. Z. Degraeve & Eva Labro & F. Roodhooft, 2005. "Constructing a Total Cost of Ownership supplier selection methodology based on Activity-Based Costing and mathematical programming," Accounting and Business Research, Taylor & Francis Journals, vol. 35(1), pages 3-27.
    15. Wen-Hsien Tsai, 2018. "Carbon Taxes and Carbon Right Costs Analysis for the Tire Industry," Energies, MDPI, vol. 11(8), pages 1-22, August.
    16. Wen-Hsien Tsai & Jui-Chu Chang & Chu-Lun Hsieh & Tsen-Shu Tsaur & Chung-Wei Wang, 2016. "Sustainability Concept in Decision-Making: Carbon Tax Consideration for Joint Product Mix Decision," Sustainability, MDPI, vol. 8(12), pages 1-22, November.
    17. Wen-Hsien Tsai & Shang-Yu Lai, 2018. "Green Production Planning and Control Model with ABC under Industry 4.0 for the Paper Industry," Sustainability, MDPI, vol. 10(8), pages 1-29, August.
    18. Nina Linn Ulstein & Marielle Christiansen & Roar Grønhaug & Nick Magnussen & Marius M. Solomon, 2006. "Elkem Uses Optimization in Redesigning Its Supply Chain," Interfaces, INFORMS, vol. 36(4), pages 314-325, August.
    19. Wen-Hsien Tsai & Yin-Hwa Lu, 2018. "A Framework of Production Planning and Control with Carbon Tax under Industry 4.0," Sustainability, MDPI, vol. 10(9), pages 1-24, September.
    20. Wen-Hsien Tsai, 2018. "Green Production Planning and Control for the Textile Industry by Using Mathematical Programming and Industry 4.0 Techniques," Energies, MDPI, vol. 11(8), pages 1-24, August.

    More about this item

    Keywords

    optimization; Optimalizácia; Activity-based costing; Theory of constraints; Product mix decisions; Kalkulácia nákladov podľa čiastkových aktivít; Teória obmedzení; Rozhodovanie o produktovom mixe;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnleam:v:2015:y:2015:i:4:id:262. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.