Integration of Mahalanobis-Taguchi System and activity based costing for remanufacturing decision

Abstract

Remanufacturing is a process that returns the second hand and used product that have theperformance similar or better than the new product. The remanufacturer cannot bepredicting the end of life (EOL) of crankshaft to remanufacture, repair or reject due to thelimited information provided by Original Equipment Manufacturer (OEM) which depend on atraditional inspection to make a decision. Subsequently, Traditional Cost Accounting (TCA)which the manufacturing overhead are driven by the production volume are being applied.The aim of this work is to develop a distinctive pattern of crankshaft and identify the criticaland non-critical parameter of crankshaft based on the Mahalanobis Taguchi System (MTS),then applied the Activity Based Costing (ABC) as a method of estimation for theremanufacturing cost of crankshaft. In methodology, the scatter diagram is construct todevelop the pattern recognition using T Method-3, Taguchi orthogonal array (OA) areapplied to identify the important parameter using T Method and lastly, the ABC system isanalysed the costing of critical parameters. Quality inspection is the most important in qualityinspection to reduce the number of parameter of each engine model and to compare whichcosting system can produce the cheapest price. Therefore, it is also to prove the combinationof applying MTS method with ABC system will make the profitability and manufacturing costare more accurate.