Model 17

Goals of this lesson

Introduction for the use of organizational diagrams in Activity Based Costing
- and assignment of cost factors to activities

The given example describes a simple customer support process which delivers product information for customers. Therefore a customer calls the customer support. The staff enlists the customers' wishes / questions in a ticket system and provides the required information afterwards. In this case we’ll work with three cost factors — employee salary, costs for the ticket system license and energy costs caused by the use of personal computers.

How-to

Approach

Modeling

Create a collaboration diagram and model the process (Figure 1)

Figure 1. Collaboration Diagram of the example process / IYOPRO link

Create an organizational diagram and open it
- Model the organizational set-up (Figure 2)
- Change the element types to 'Cost Center' and 'Human' in the simulation properties respectively (Figure 3)

Figure 2. Organizational Diagram / IYOPRO link

Figure 3. Simulation properties

Defining payments and working times of employees

Mark Michael Noword
Open the simulation properties (Figure 3)
- Assign a fixed salary of 2400 Dollars per month to Michael Noword (Figure 4)

Figure 4. Optional Simulation Properties

Open the shift editor (Figure 5)
- Select the 40h week with lunch breaks from the drop down list
Switch to the organization tab on the ribbon menu
Create a new role called 'Customer Support' as already explained in the context of organizational diagrams.
Assign the role to Michael Noword

Figure 5. Shift Editor

Distributing cost factors

Switch back to the collaboration diagram (Customer Support)
- Mark the task 'enlist customer details' and open the advanced properties editor
- Add the role Customer Support as participant (Figure 6)
- Repeat the steps for activity 'send product information'

Figure 6. Adding participants

Distribute the cost centers (Figure 7)
- Mark the activity 'enlist customer details' again and open the simulation properties editor
- Open the area of Activity Based Costing and select energy
- Set it to time dependent and type in the value 0.5 kWh
- Repeat the steps for activity 'send product information'

Figure 7. Distributing Cost Centers

Adding duration and inter-arrival time

How to set durations and inter-arrival time has already been explained in a previous tutorial. Set the properties described as follows:

Set the inter-arrival time to 5 minutes at the start event
Set duration of 'enlisting customer details' as normally distributed with 4 minutes and 20 seconds on average and with a standard deviation of 1 minute and 20 seconds
Set the duration of 'send product information' as a constant value of 1 minute and 20 seconds

Explanation

First of all we modeled the process and the organizational set-up. Then we filled the organizational resources with the required information. Humans need salary assigned to cost factor as well as a working plan since they aren’t available 24h per day. An employee can have different roles in different processes. Thus we had to assign Michael Noword to the role 'Customer Support' in context of our process. This role was attached to the tasks to point out who executes the tasks. Right after that we assigned the energy costs to our tasks. Tasks spend energy because the participant works with a personal computer. The more time is spent to finish his tasks the more energy is needed. So the consumption is time dependent. The cost center ticket system license doesn’t have to be assigned to tasks because it isn’t influenced by activity durations and the number of process cycles. These costs will be distributed over the number of process cycles in the simulation. In the end we set our activity durations and inter-arrival time to denote how much time our activities take and how often the process is started. These properties are also needed for our time dependent energy costs.

Report

See below for the run configuration, which we set up to receive the report statistics from below.

Please refer to the section Experiment Results for more information on the report specific data.

Run configuration

Stochastic Seed: 12345
Simulation start date: 1/1/2015 12:00:00 a.m.
Simulation stop time: 24
Simulation stop time unit: Hours

Report statistics

Start the simulation by clicking the simulation button on the simulation tab of the ribbon menu (Figure 8)
Open simulation report and head for the costing details (Figure 9)

The fixed salaries show the incurred costs by Michael Noword for this process. We also have the ticket system license displayed. 161,29 Dollar are the costs of the ticket system license for 1 day according to our simulation time. The costs of the ticket system license are 208.3% of our quantity-induced activity costs. If you simulate the process by using a longer simulation time the percentage of the ticket system costs becomes lower while the number of process cycles increases. This effect is called economies of scale. We can see the energy costs too. They employ a unit measurement so the results are displayed in a separate table. Further cost centers employing the same unit would be displayed in the same table.

Figure 8. Simulating a diagram

Figure 9. Costing Details