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dc.contributor.authorDegraeve, Zeger
dc.contributor.authorLabro, Eva
dc.contributor.authorRoodhooft, Filip
dc.date.accessioned2017-12-02T14:16:57Z
dc.date.available2017-12-02T14:16:57Z
dc.date.issued2004
dc.identifier.urihttp://hdl.handle.net/20.500.12127/1316
dc.description.abstractIn this paper we elaborate on a Total Cost of Ownership supplier selection methodology that we have constructed using real life case studies of three different industrial components groups in a firm. These case studies are presented in this article. Analysing the value chain of the firm, data on the costs generated by the purchasing policy and on supplier performance are collected using Activity Based Costing (ABC). Since a spreadsheet cannot encompass all these costs, let alone optimise the supplier selection and inventory management policy, a mathematical programming model is used. For a specific component group the combination of suppliers is selected that minimises the Total Cost of Ownership. TCO takes into account all costs that the purchase and the subsequent use of a component entail in the entire value chain of the company. The TCO approach goes beyond minimising purchase price and studies all costs that occur during the entire life cycle of the item in the organisation. Possible savings of between 6 and 14% of the total cost of ownership of the current purchasing policy are obtained for the three cases. Keywords: Activity Based Costing, mathematical programming, supplier selection, purchasing
dc.language.isoen
dc.publisherVlerick Business School
dc.subjectCorporate Finance
dc.titleConstructing a total cost of ownership supplier selection methodology based on activity based costing and mathematical programming
dc.source.issue8
dc.source.numberofpages52
vlerick.knowledgedomainAccounting & Finance
vlerick.supervisor
vlerick.typecommWorking paper
vlerick.vlerickdepartmentA&F
dc.relation.urlhttp://public.vlerick.com/Publications/e065a6b1-69a9-e011-8a89-005056a635ed.pdf
dc.identifier.vperid76070
dc.identifier.vperid140840
dc.identifier.vperid51506
dc.identifier.vpubid1374


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