Spare Parts Cost Management for Long-Term Economic Sustainability: Using Fuzzy Activity Based LCC

Abstract

The concept of life cycle sustainability assessment provides an interdisciplinary space to discuss the main challenges in addressing sustainability from a long-term perspective. However, uncertainty related to cost parameters constitutes one of the main challenges in LCC. This uncertainty prevents managers from precisely anticipating the exact values of important variables. These variables include the costs of spare parts inventories, which in some cases can constitute high percentages of the total cost of a product or service. We propose an activity-based costing model that handles uncertainty using triangular numbers, along with a matrix representation, and Weibull functions to incorporate the projected equipment reliability into the model. A case study based on a spare parts distribution center, which serves the mining industry in Northern Chile, is presented. The results obtained are compared with a traditional costing method. The advantage of using the proposed approach over the traditional one is evident. Future research is directed towards the implementation of a larger number of inventory policies, along with experimentation with other types of fuzzy numbers.

Penerapan Activity Based Costing untuk Meningkatkan Profitabilitas Perusahaan

“…Penelitian serupa tentang aplikasi ABC pada perguruan tinggi di Pekanbaru menunjukkan bahwa ABC berpengaruh secara langsung pada keunggulan bersaing dan meningkatkan kinerja. Penelitian di perusahaan manufaktur spare-parts tentang sistem ABC disinyalir dapat memberikan informasi yang tepat kepada manajer perusahaan [12] [13].…”

After 30 Years, What Has Happened to Activity-Based Costing? A Systematic Literature Review

“…In the energy field, we find applications in thermal power plants (Dwivedi & Chakraborty, 2016;Feng et al, 2008), in energy systems in Taiwan (Yang, 2018) and in heating and biomass-based energy (Korpunen & Raiko, 2014). Likewise, ABC has been applied in logistics, for example, in a logistics distribution center in Chile (Dura´n et al, 2019) or the logistics of construction materials (Fang & Ng, 2019). In the construction sector, we find, for example, applications of ABC to analyze hidden costs in a construction project (Shao et al, 2018), to predict costs in the construction of prefabricated units with uncertainty (Wang et al, 2018) or to reduce environmental impact in-wall supply (Yi et al, 2017).…”