Activity Cost Based Manufacturer Cost and Profit Optimization

Abstract

Based on the theory of supply chain management and activity-based costing method, we study the cost structure of manufacturer, which is in the mode of supply chain operation. And then we develop two models: manufacturer's cost model and profit optimize model. Every client's cost can be computed using the cost model respectively. The customer order quantities are defined as decision-variable, and the manufacturer's profit as the objective function in the profit optimization model. At last we apply genetic algorithm method to simulate a case of manufacture enterprise with the real data, the results show that the method is effective and the manufacturer enterprises can increase its profit by adjusting the client's order quantities.