On the Connections Between Activity Based Costing Models and Optimization Models for Decision Support Classic Reprint

Jeremy F. Shapiro

ISBN 10: 1334296898 / ISBN 13: 9781334296895

Published by Forgotten Books, 2019

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New Book. Shipped from UK. Established seller since 2000.

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Bibliographic Details

• Title: On the Connections Between Activity Based Costing Models and Optimization Models for Decision Support Classic Reprint
• Publisher: Forgotten Books
• Publication Date: 2019
• Language: English
• ISBN 10: 1334296898
• ISBN 13: 9781334296895
• Binding: PAP
• Condition: New

About this title

Synopsis

Excerpt from On the Connections Between Activity Based Costing Models and Optimization Models for Decision Support

In manufacturing firms, traditional accounting methods determine unit product costs from allocations of functional categories that have little to do with the firms' value adding activities. Activity-based costing (abc) methods seek instead to identify cost drivers and relationships that more accurately describe how costs of manufacturing activities are incurred (kaplan Cooper Some costs may vary directly with the volume of a cost driver, whereas others may not vary with volume, or may vary in a non-linear or non-smooth manner.

For example, direct labor costs may be accurately described as a linear function of direct labor hours as the cost driver. By contrast, indirect plant overhead costs may be accurately described as the sum of a lumpy (fixed) cost term and a variable cost term based on the number of employees working at the plant who are not directly involved in production.

Although we will focus on manufacturing applications in this paper, ABC methods are also pertinent to service organizations and service functions within manufacturing firms (see Chapter 7 in Cooper and Kaplan Banker and Johnston [1993] report on an extensive analysis of cost drivers and cost relationships for U. S. Airline companies. Lewis [1991] discusses the development of ABC models to describe marketing costs in manufacturing firms.

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About the Author

Jeremy Shapiro is a professor emeritus in the Sloan School of Management at MIT. For nine years he served as the co-director of MIT's Operations Research Center. Previously, he was employed by Procter and Gamble, Hughes Aircraft Company, and the Port of New York Authority. He received his B.M.E. and M.I.E. degrees from Cornell University and a Ph.D. degree in Operations Research from Stanford University. Dr. Shapiro has published over 60 papers in the areas of operations research, mathematical programming, logistics, supply chain management, finance, and marketing. He is also president of SLIM Technologies, LLC, a Boston-based firm specializing in the implementation and application of modeling systems for supply chain management and other business problems. His outside interests include reading, traveling, biking and playing tennis. He is married to Martha J. Heigham and has three children, Alexander, Lara, and Nicholas.