Combining Activity-Based Costing with the Simulation of a Cellular Manufacturing System

Discrete-event simulation is one of the most effective techniques for analyzing a manufacturing system. Unfortunately, little attention is given to using simulation models to estimate the economic impact of a proposed system configuration. This paper defines how activity-based costing (ABC) concepts can be incorporated into a discrete-event simulation model. Special emphasis is on demonstrating how decision making can be aided by having the simulation create a detailed “Bill of Activity” describing costs associated with manufacturing a part. The integration of ABC and simulation is illustrated by evaluating the impact of a proposed manufacturing cell configuration. The additional costing information aids in cell design, determining part sequencing and scheduling, and provides a quick evaluation of product mix changes for a part family