Industrial and Management Systems Engineering


Date of this Version



R.E. Williams, P. Savory, and R. Rasmussen (1997), “An Integrated Approach to Simulation and Activity-Based Costing for Evaluating Alternative Manufacturing Cell Designs,” Transactions of North American Manufacturing Research Institute of the Society of Manufacturing Engineering, pp. 263-267.


One effective technique for improving manufacturing efficiency involves the application of group technology part families and manufacturing cells. Selection of the best or optimum configuration of the manufacturing cell relies on the experience and judgment of the cell designer. This paper describes how activity-based costing (ABC) concepts can be integrated into a discrete-event simulation model and be used to evaluate manufacturing cell configurations. The output of the combined ABC simulation model provides a detailed “Bill of Activity” which allows the cell designer to consider costs as a critical factor in the cell design problem. Alternative cell configurations studied in this paper include an in-line or linear cell, and a U-shaped or loop layout. Additional simulation models were created that tracked the non-allocated costs associated with operator idle time. The one operator cell was significantly better than the two operator model due to the reduced operator idle time and associated costs. The linear cell had slightly lower non-allocated costs for operator idle time as compared to the U-cell, but differences in other cost and throughput factors were insignificant.