A Mathematical Programming Approach for Procurement Using Activity Based Costing
AbstractActivity Based Costing and Management are important topics in today's management accounting literature. While there has been much attention paid in the Activity Based Costing literature to customer profitability analysis, process improvement and product design, there has been far less notice taken of purchasing. In this paper we develop an Activity Based Costing approach for the determination of procurement strategies. Vendor selection using an Activity Based Costing approach is choosing the combination of suppliers for a given product group that minimizes the total costs associated with the purchasing strategy. To this end we develop a mathematical programming model where decisions involve the selection of vendors and the determination of order quantities. The system computes the total cost of ownership, thereby increasing the objectivity in the selection process and giving the opportunity for various kinds of sensitivity analysis. Copyright Blackwell Publishers Ltd 2000.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.
Volume (Year): 27 (2000-01)
Issue (Month): 1&2 ()
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X
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- Yim, Andrew, 2010. "Quality Cost and Failure Risk in the Choice of Single versus Multiple Sourcing," MPRA Paper 27858, University Library of Munich, Germany.
- Moisello Anna Maria, 2012. "Cost Measurement And Cost Management In Target Costing," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 533-547, July.
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