Product mix decisions based on ABC and TOC

Eva Výrostová

Ekonomika a Management, 2015, vol. 2015, issue 4

Abstract: The decision about a product mix presents a typical problem for manufacturing companies. This paper deals with possible enhancements to operations management by solving the optimal product mix problem while respecting the existing capacities. The main objective is to present a combination of activity-based costing (ABC) and theory of constrains (TOC), which allows the managers to obtain more precise information about the product mix with respect to existing bottlenecks, than would be the case with ABC or TOC alone. The combination of ABC and TOC enhances the decision making process by modelling relevant cost more precisely by using ABC, while simultaneously optimizing the product mix with respecting the existing physical constraints such as production capacity or demand constraints.

Keywords: optimization; Optimalizácia; Activity-based costing; Theory of constraints; Product mix decisions; Kalkulácia nákladov podľa čiastkových aktivít; Teória obmedzení; Rozhodovanie o produktovom mixe (search for similar items in EconPapers)
JEL-codes: D24 M11 M21 (search for similar items in EconPapers)
Date: 2015
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