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Integrated Quality and Material Flow Cost Accounting (MFCA) Analysis of Production System

Apisada Youngin and Wichai Chattinnawat
Department of Industrial Engineering, Faculty of Engineering, Chiang Mai University, Chiang Mai, Thailand
Abstract—Material Flow Cost Accounting (MFCA) is one of the environmental management accounting methods aims to assess and reduce both environmental impact and product costs. Product quality is a crucial factor that significantly affects customer’s satisfaction and many organizations emphasize and invest large amounts in designing and assuring quality system to prevent flow of defectives along the process. This research applied the Material Flow Cost Accounting (MFCA) technique first to trace material and energy used both in terms of physical quantity and monetary units in order to analyze efficiency of process and then to design the lot size and quality inspection that maximize of the total positive product cost with respect to the total cost obtained from the MFCA concept. Based on the case study data, the results of MFCA analysis showed that the highest portion of negative product cost was material accounting for 78.54% and following by System cost of 7.61% comparing with the total product cost. The analysis revealed that the loss cost can be reduced by improving the process quality which depends on the lot size. In the future the researcher will use artificial bee colony algorithms to determine the proper design by designing the optimal sampling plan and Optimal Lot Sizing that minimize both total cost, quality cost and negative cost.

Index Terms—sampling inspection, serial multi-stage process, optimal lot size, Material flow cost accounting

Cite: Apisada Youngin and Wichai Chattinnawat, "Integrated Quality and Material Flow Cost Accounting (MFCA) Analysis of Production System," Journal of Traffic and Logistics Engineering, Vol. 7, No. 2, pp. 59-63, December 2019. doi: 10.18178/jtle.7.2.59-63
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