Relations between costs and characteristics of a process: A simulation study

Abstract

Operations managers have to take decisions where costs have to be taken into account. However, the amount of those costs depends on the costing system in use. In consequence, the aim of this paper is to analyse the influence of the costing system on the production process and vice versa. To assess the importance of the different factors, a computer-based simulation experiment has been carried out (a four-stage production system has been modelled) and results have been analysed with a full factorial experimental design. Two different experiments are explained in this paper: The first one analyses the variation of the average manufacturing cost as a function of the costing system and the cost distribution pattern. The second one, analyses the influence of the lot size and the product family on the manufacturing cost.