Integration Of Time Driven Activity Based Costing (TDABC) And Simulation For Decision Making In Assembly Process

Tan, Fei Sian (2018) Integration Of Time Driven Activity Based Costing (TDABC) And Simulation For Decision Making In Assembly Process. Project Report. UTeM, Melaka, Malaysia. (Submitted)

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Abstract

The manufacturing industries are currently moving to the new industrial paradigm – Industry 4.0 which geared towards increasingly specialized production processes. Therefore, it is crucial to manufacturing companies to be cost-effective during their production cycle. This paper focuses on the analysis of existing costing method used by an automotive part manufacturing company in Melaka and the implementation of Time Driven Activity Based Costing (TDABC) in their production line namely assembly process. Since the company has been established since 1994 and their costing has never been updated since then. As a consequence, Time Driven Activity-Based Costing (TDABC) method is suggested to obtain the costing of an assembly production line. Comparison of TDABC method and current costing method shown that TDABC is more accurate in terms of practical capacity of production line using time equation, cost drivers with affecting parameters and apportioned of busy time and idle time of resources. The total assembly production cost for line T9AX per month using TDABC is RM25783.68. ARENA modelling predicted the cost reduction of the production line by eliminating unnecessary resources by 42.71% accounting to RM5053.50. Therefore, ARENA simulation act as a Decision Support System in this case study.

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