Spare Parts Cost Management for Long-Term Economic Sustainability: Using Fuzzy Activity Based LCC

Abstract

The concept of life cycle sustainability assessment provides an interdisciplinary space to discuss the main challenges in addressing sustainability from a long-term perspective. However, uncertainty related to cost parameters constitutes one of the main challenges in LCC. This uncertainty prevents managers from precisely anticipating the exact values of important variables. These variables include the costs of spare parts inventories, which in some cases can constitute high percentages of the total cost of a product or service. We propose an activity-based costing model that handles uncertainty using triangular numbers, along with a matrix representation, and Weibull functions to incorporate the projected equipment reliability into the model. A case study based on a spare parts distribution center, which serves the mining industry in Northern Chile, is presented. The results obtained are compared with a traditional costing method. The advantage of using the proposed approach over the traditional one is evident. Future research is directed towards the implementation of a larger number of inventory policies, along with experimentation with other types of fuzzy numbers.

Cost of Ownership of Spare Parts under Uncertainty: Integrating Reliability and Costs

“…Notably, the two prominent methods to address the challenge of uncertainty in mathematical models are the Monte Carlo simulation and fuzzy methods [42]. In the context of costing systems, several authors have explored the topic of uncertainty using either the Monte Carlo Simulation or fuzzy methods [28,[43][44][45][46][47].…”

Cost at Risk (CaR): a Methodology for Costing under Uncertainty

“…To mitigate the limitations of deterministic costing systems, some authors have proposed extended ABC models which incorporate uncertainty in the cost variables Durán et al, 2019;Jahan-Shahi et al, 1999;Ostadi et al, 2019;Sarokolaei et al, 2013). Jahan-Shahi et al (1999) applied fuzzy sets and probability distribution methods to address uncertainty in cost estimation.…”

“…The Monte Carlo simulation and fuzzy methods can be highlighted among such methods (Díaz et al, 2022). Particularly, some authors have approached the subject of uncertainty in costing systems using either the Monte Carlo Simulation or Fuzzy methods (Durán & Afonso, 2021;Durán et al, 2019;Jiménez et al, 2015;Kropivšek et al, 2021;Ostadi et al, 2019;Rivero & Emblemsvåg, 2007).…”

Penerapan Activity Based Costing untuk Meningkatkan Profitabilitas Perusahaan

“…Penelitian serupa tentang aplikasi ABC pada perguruan tinggi di Pekanbaru menunjukkan bahwa ABC berpengaruh secara langsung pada keunggulan bersaing dan meningkatkan kinerja. Penelitian di perusahaan manufaktur spare-parts tentang sistem ABC disinyalir dapat memberikan informasi yang tepat kepada manajer perusahaan [12] [13].…”