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Contribution To The Development Of The Direct And Indirect Costs Reduction Model (Dicrm-8) In Manufacturing Companies

Author

Listed:
  • Berislav Bolfek

    (University of Zadar, Department of Economics, Croatia)

Abstract

There are numerous methods described in the literature that explain how to reduction certain types of costs. Most of the methods mentioned in the literature do not list specific cost reduction measures and activities. The problem in manufacturing companies arises when the actual cost price of an individual product obtained by calculating a work order exceeds the planned price of that product. The goal of the research is to find one of the ways to solve the problem by reduction direct and indirect costs. The methodology is based on the development and establishment of the Direct and Indirect Costs Reduction Model (DICRM-8) in manufacturing companies, which consists of eight interconnected steps. The test results show the full functionality of the model, which enabled the comparison of planned, incurred and projected cost prices in one place, as well as calculating the total amount of cost reduction for all work orders. The key results illustrate the use of different measures and activities to reduction costs in the case of wood industry. This research contributes to the development of models for reduction direct and indirect costs in manufacturing companies.

Suggested Citation

  • Berislav Bolfek, 2021. "Contribution To The Development Of The Direct And Indirect Costs Reduction Model (Dicrm-8) In Manufacturing Companies," Poslovna izvrsnost-Business Excellence, University of Zagreb Faculty of Economics & Business, vol. 15(1), pages 81-105.
    • Handle: RePEc:zag:busexc:v:15:y:2021:i:1:p:81-105
    DOI: 10.22598/pi-be/2021.15.1.81
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    References listed on IDEAS

    as
    1. Pereira, Pedro, 2001. "Market power, cost reduction and consumer search," International Journal of Industrial Organization, Elsevier, vol. 19(9), pages 1457-1473, November.
    2. Soundararajan K. & Janardhan Reddy K., 2019. "Cost-reduction and quality improvement using DMAIC in the SMEs," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 68(8), pages 1528-1540, July.
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