OUTSOURCING DECISIONS WITH ACTIVITY BASED COSTING AND THEORY OF CONSTRAINTS: A SAMPLE APPLICATION BY LINEAR PROGRAMMING

40348

Decisions made by traditional costing systems may be inadequate in today’s modernmanufacturing environments which use advanced manufacturing technology. Both activitybased costing and theory of constraints which are the some of the modern methods may be used to improve decision making process and make more rational decisions by elevating the deficiency of traditional methods. Outsourcing decisions explains that which products will be produced in the company and which will be bought from the vendors so that these decisions are so important to be able to increase company’s profitability. Companies can use traditional methods and also activity based costing and theory of constrains separately which are the some of the modern methods in outsourcing decisions. The aim of this study is to use activity based costing and theory of constraints in outsourcing decisions which are so important to increase companies’ profitability and to compare the profitability results of these techniques and theories with the profitability results of traditional method. In this framework models are developed for activity based costing and theory of constraints separately for outsourcing decisions using linear programming and profitability solutions of these techniques are compared with profitability solutions of traditional method in a sample company.

316

Outsourcing decisions , activity based costing , theory of constraints

Mustafa Kemal University Journal Of Graduate School Of Social Sciences

333

Mustafa Kemal University Journal Of Graduate School Of Social Sciences