Manufacturing & Cost accounting

1. Manufacturing & Cost accounting 2005.10.7. Kim Haejoong

2. A modeling approach for production costing and continuous improvement of manufacturing process Production Planning & Control vol.8 (1997) O. SENECHAL, C.TAHON Universite de Valenciennes et du Hainaut cambresis, France

3. Introduction • Conflicting elements due to current methods

4. The concepts of activity for cost management • Classical accounting • To attribute direct costs: • the costs related to material, direct workforce, and generally direct manufacturing of the product, are attributed to these products according to the real consumption of resources. • To assign indirect factory expenses to products: this point is generally implemented in two stages: • ( i) The assignation of indirect resources expenses to cost centers, • ( ii) The assignation of expenses accumulated in cost centers to products. • Classical accounting problem • The allocation of costs to products that are unrelated to the products being produced; • The omission of costs that are related to the product (administrative costs, warranty costs etc.) • The costing of only a subset of the outputs of the company as products (some intangible products such as services are not considered as products) • The inaccurate assignation of costs to products. • This inaccuracy is mainly due to price distortions when the cost system is too aggregated and average prices are used instead of specific prices, • to quantity distortions when the costs are allocated to products using a basic that is not perfectly proportional to the actual consumption of resource by products

5. ABC/ABM • Classical accounting approaches assume that products consume costs, whereas ABC and ABM assume that product consume activities and activities consume resources. The concept of activity allows cost managers to sustain their real part , that is, contributes with users to the design of relevant performance indicators.

6. The modeling methodology • The aim of this methodology • is to allow the identification of costs and added value factors in the implementation of production in order to know which element must be modified to meet the target costs • We can now see how the concept of activity can contribute to the integration necessary for the building and exploitation of these indicators. • The second point we are interested in is the integration of the different skills of the company and of the different stages of product life cycle.

7. The adaptive loop of production systems

8. The concept of activity is the commonly manipulated concept throughout the different stages of the product life cycle.

9. The logical and physical models Function Resource Activity

10. Conclusion • We propose a modeling methodology allowing each factor in the life cycle of the product to contribute to the performance evaluation, in manipulating well-known concepts like activities and resources.

11. Integrating simulation with activity-based management to evaluate manufacturing cell part sequencing Computers & industrial engineering 37(1999) Rodney R. Rasmussen, Paul A. Savory, Robert E. Williams Department of Industrial Engineering, University of Nebraska, 175 Nebraska Hall, Lincoln, USA

12. Manufacturing cell and part flow description • Manufacturing cell Four part types: A, B, C, D

13. Part family characteristics

14. Activity-based costing for the manufacturing cell • ABC is a procedure that often makes it possible to estimate product costs more accurately than traditional cost systems. • Two–stage process • The first stage transfers costs associated with resource consumption and support to activities • The second stage allocates activity costs to products.

15. Simulation design

17. Simulation results and analysis • 52주를 기준으로 24개의 작업순서에 대한 시뮬레이션 모델링 • Average time in the system (TIS)

18. Inventory and per unit manufacturing costs for each part sequence

20. Operator idle time and unused capacity costs for each part sequence

21. The best part production sequence is CDBA • The second best TIS • The smallest in-cell inventory cost • One of the smaller per unit manufacturing costs • The highest unused capacity cost • The operator idle-time cost falls in the middle of the rage of values indicating reasonable operator utilization

22. Conclusions • 전통적인 성과지표나 혹은 비용요소만 고려한다면 정확한 분석이 힘들다. • 원가정보를 활용한다면 보다 정확한 분석이 가능하다. • 시스템 설계 • 지속적 프로세스 개선

23. Discussion • Planning & Scheduling  Accounting System Accounting System Estimated Costs Planned Costs Production Planning & Scheduling System Performed Costs Execution & Controlling System

24. 제품계획, 생산계획 및 스케줄링의 정확한 원가 반영을 위한 framework • Planed cost와 performed cost의 상호작용. 생산계획이 performed cost에 미치는 영향 • 프로세스의 개선으로 인한 제품 원가의 영향. • 회계방식에 따른 생산계획 및 스케줄링의 성능 차이 • 기존의 ABC를 보완할 수 있는 방법.

25. Q&A • 스케줄링에 따라 제품 원가가 달라질 수 있나? • 기존의 스케줄링 성과지표인 Makespan이나 Tardiness은 비용을 직접적으로 표현한 것은 아니지만, 비용에 영향을 줄 수 있는 시간이나 페널티 개념이 포함된 것이다. 만약 원가를 계산할 수 있는 정교한 방법(원가 산정에 소요되는 비용은 일단 무시)이 있다면, 스케줄링에 따른 비용 차이를 구할 수 있을 것이다. 즉 activity 단위를 작게 나누고 RFID 등을 이용하여 상세한 정보를 수집할 수 있다면 정확한 원가계산이 가능할 것이다. 다만, time horizon을 어떻게 두는가가 의사결정에 큰 영향을 미칠 수 있기 때문에 time horizon 설정도 중요할 것 같다. • 첫 번째 논문에서 제시한 모델이 기존의 ABC와 다른 점은? • 기본 개념은 동일하며, activity에 대한 개념을 조금 확장시켜 이 activity가 기존의 성과지표와 잘 결합되어 실제 의사결정에 도움을 주는데 목적이 있다.