Cost of ownership of spare parts under uncertainty: integrating reliability and costs

In capital-intensive organizations, decisions regarding capital costs play an important role due to the significant amount of investment required and the expected return on investment. Spare parts management is crucial to those ends, as spare parts management can constitute a significant portion of OPEX. Companies must implement a trade-off analysis between stock levels and assets’ availability. Decision-making supports mechanisms such as the Level of Repair Analysis (LORA), Integrated Logistics Systems (ILS), and life-cycle costing (LCC) models have been developed to aid in equipment selection, implementation, and decommissioning. Nowadays, these mechanisms appear to be integrated with risk-management models and standards. This paper proposes a long-term costing model that integrates a capacity analysis, reliability functions, and risk considerations for the cost management of logistics activities, particularly in MRO structures. The model is built upon Time-Driven Activity-Based Costing (TD-ABC) and incorporates the volume of activities generated by MRO needs. It also addresses uncertainty through the integration of a cost-at-risk model. By integrating spare parts, activity-based cost models, and risk measurement through Monte Carlo simulation, this study offers powerful insights into optimizing spare parts logistics activities. The proposed model is a novel approach to include the risk of cost in spare parts management, and its matrix-activity-based structure makes possible the development of sophisticated mathematical models for costing and optimization purposes in different domains.(undefined

A simplified activity-based costing approach for SMEs : the case study of an Italian small road company

Purpose: The paper proposes an original conceptual model for designing a simplified Activity-Based Costing (ABC) approach for Small and Medium-sized Enterprises (SMEs) by focusing on the transport sector. Design/Methodology/Approach: The model is designed starting from the distinctive characteristics of the SMEs’ collaborative culture. The approach is then tested in the case of an Italian small-road company. Findings: The simplified ABC, which was gradually introduced in the SME, allowed the firm to gain confidence with the costing system. Moreover, the discussion of the results led to identifying the main areas to improve. Practical Implications: Costing systems based on collaboration can lead to operational improvements in SMEs operating in dynamic and competitive sectors as transport. Moreover, advanced technologies may hold a crucial role for their development. Originality/Value: Not much research has considered collaboration as a driver for introducing ABC in SMEs. The paper contributes to the literature on simplified managerial approaches, suggesting trends for future research.peer-reviewe

Strategies for implementing activity-based costing in the UK manufacturing industry

The purpose of this paper is to report the findings with a case study on why activity based costing lacks impact in the UK manufacturing industry. Activity based costing was performed on selected MT range subsystems of an electrical power generator to compare with the current UNN UK’s conven-tional costing system. The results have found that the current costing system works well for the MT products and thus change of costing system is not necessary for these products. The activity based costing system can be partially implemented in UNN UK for areas requiring detailed costing infor-mation such as new renewable products. Based on the result of the case study, this paper also high-lights the strategies need to be considered in order to adopt activity based costing within a typical manufacturing environment

ABC Diffusion in the Age of Digital Economy: the UK Experience

Since the beginning of the 21st century, there has been a call for further research to trace the effects of the speedy changes in business environment on management accounting practices. This study assesses the impact of different information technologies on ABC adoption and implementation. It uses a cross-sectional survey of financial directors and controllers in the UK firms. Postal and electronic questionnaires have been used in order to collect the empirical data. The findings revealed that the rate of ABC adoption has shown a number of changes between 1999 and 2005. The proportions of ABC users and those currently assessing it have dramatically fallen. The percentage of firms rejecting ABC has slightly fallen as well. However, there has been a considerable increase in the number of firms that abandoned ABC implementation and those firms that gave no consideration for its implementation. These results indicate a decrease in the popularity of ABC. ERP systems seem to have a slightly low significant impact on the initial decision of ABC adoption in those firms that do not have any consideration for ABC and firms that have an ERP system before ABC adoption. Furthermore, the results indicate that firms use different information technologies in the ABC assessment and implementation. For ABC assessment, general software applications are the most preferable software packages while a mix of different ABC software packages is the most popular in the case of ABC implementation. Finally, the findings of this study provide an indication on the nature of the possible effect of general IT-related problems on ABC implementation

Analyzing customer profitability in hotels using activity based costing

This paper investigates the use of customer profitability analysis (CPA) in four and five star hotels located in Algarve (Portugal). Traditional accounting systems have been criticized for focusing on product, service or department profitability, and not on customer profitability, thus failing to provide effective information to marketing-related decisions. Results are reported by operating departments, whilst marketing activities focus on customer market segments. Recognizing the growing emphasis on customer value creation, and to overcome the mismatch between the provision and use of information in hotels, CPA techniques have been suggested. Notwithstanding their benefits, namely a strategic focus, hotels still apply traditional techniques. A structured questionnaire collected through personal interviews showed that CPA is far from widespread in hotel management; instead, hotels accumulate costs in profit centers and in cost centers. None of the surveyed hotels had adopted activity based costing, despite this technique being viewed as the most appropriate to calculate individual customer profitability.Este artigo investiga a análise de rendibilidade de clientes nos hotéis de quatro e cinco estrelas do Algarve (Portugal). Os sistemas de contabilidade tradicionais focalizam-se na rendibilidade dos produtos, serviços ou departamentos não fornecendo informação eficaz para decisões de marketing. Os resultados são relatados por departamentos, sendo as atividades de marketing direcionadas para segmentos de mercado. Reconhecendo o foco na criação de valor para o cliente e o “desencontro” entre fornecimento e utilização de informação nos hotéis, a literatura tem sugerido técnicas de análise de rendibilidade de clientes. Apesar dos beneficios destas técnicas, nomeadamente o foco estratégico, os hotéis utilizam técnicas tradicionais. Um questionário estruturado recolhido presencialmente revelou que a técnica CPA está pouco difundida no setor; os hotéis acumulam custos por centros de resultados e por centros de custos. Nenhum adopta o custeio baseado nas actividades, embora seja o método mais apropriado para atribuir custos a clientes.info:eu-repo/semantics/publishedVersio

Management accounting education: is there a gap between academia and practitioner perceptions?

A mail survey was conducted of all Institute of Chartered Accountants of New Zealand accredited Tertiary Education Institutions and 300 randomly selected New Zealand companies to ascertain the views of management accounting academics and practitioners on the contents of management accounting courses and the skills and competencies of recent graduates. The results show that practitioners placed an emphasis on traditional management accounting techniques, while academics placed an emphasis on contemporary techniques. Both groups were in agreement on the skills and characteristics required of recent graduates. An interesting finding was the emergence of negative comments on the arrogance of new graduates and an increased need for graduates to be work ready. These two aspects were not a feature of previous studies. The implications of the results are that academics cannot ignore the teaching of traditional management accounting techniques and may need to increase the coverage of the issues involved in implementing contemporary management accounting techniques

Resources and Tools:A Step-by-Step Methodological Guide for Costing HIV/AIDS Activities

Many developing countries have recognized the need for comprehensive national reforms and comprehensive prevention, treatment, and care and support initiatives to reduce future transmission of and to meet the growing demand for HIV/AIDS services. As a part of these national health reform initiatives, governments are exploring ways to allocate resources in the most efficient and effective way to mitigate the HIV/AIDS epidemic. However, many countries lack information on the level and nature of the costs of HIV/AIDS programs. This document provides an introduction to the procedure for calculating and analyzing the costs of HIV/AIDS programs and describes how to measure directly the actual costs of a program that is up and running. The step-by-step guide is intended to provide project managers in the field with a framework for how to do measure costs for a single, recent year in the life of an HIV/AIDS program. An illustrative activities list in the report annex will assist the user to develop an activities-based framework. The information gleaned from the costing framework will enable policymakers and program managers to make informed resource allocation decisions

D3.2 Cost Concept Model and Gateway Specification

This document introduces a Framework supporting the implementation of a cost concept model against which current and future cost models for curating digital assets can be benchmarked. The value built into this cost concept model leverages the comprehensive engagement by the 4C project with various user communities and builds upon our understanding of the requirements, drivers, obstacles and objectives that various stakeholder groups have relating to digital curation. Ultimately, this concept model should provide a critical input to the development and refinement of cost models as well as helping to ensure that the curation and preservation solutions and services that will inevitably arise from the commercial sector as ‘supply’ respond to a much better understood ‘demand’ for cost-effective and relevant tools. To meet acknowledged gaps in current provision, a nested model of curation which addresses both costs and benefits is provided. The goal of this task was not to create a single, functionally implementable cost modelling application; but rather to design a model based on common concepts and to develop a generic gateway specification that can be used by future model developers, service and solution providers, and by researchers in follow-up research and development projects.<p></p> The Framework includes:<p></p> • A Cost Concept Model—which defines the core concepts that should be included in curation costs models;<p></p> • An Implementation Guide—for the cost concept model that provides guidance and proposes questions that should be considered when developing new cost models and refining existing cost models;<p></p> • A Gateway Specification Template—which provides standard metadata for each of the core cost concepts and is intended for use by future model developers, model users, and service and solution providers to promote interoperability;<p></p> • A Nested Model for Digital Curation—that visualises the core concepts, demonstrates how they interact and places them into context visually by linking them to A Cost and Benefit Model for Curation.<p></p> This Framework provides guidance for data collection and associated calculations in an operational context but will also provide a critical foundation for more strategic thinking around curation such as the Economic Sustainability Reference Model (ESRM).<p></p> Where appropriate, definitions of terms are provided, recommendations are made, and examples from existing models are used to illustrate the principles of the framework

Dynamic analysis of friction stir welding joints in dissimilar material plate structure

Friction stir welding (FSW) is a welding process that widely used as a solid state joining process for producing welded structure of similar and dissimilar materials such as aluminum alloy, magnesium etc. FSW process has expanded rapidly in industries including aerospace, automotive and maritime due to several advantages compared to other fusion welding. In this paper, experimental modal analysis (EMA) and normal mode finite element analysis (FEA) of the FSW welded joint structure of materials AA6061 and AA7075 will be carried out to identify dynamic properties. Rigid Body Element (RBE2) in MSC NASTRAN/PATRAN is used to model the welds and their compatibility for representing FSW welded structure also being identified. Model updating is performed to minimize the discrepancy between EMA and FEA. Model updating will be acted as an optimization method and is being presented using the structural optimization capability. Finite model updating could be done in individual components and welded structure. RBE2 connecting element can be used to represent friction stir welding with good accuracy