Green Activity-Based Costing Production Planning and Scenario Analysis for the Aluminum-Alloy Wheel Industry under Industry 4.0

• Main Authors: Wen-Hsien Tsai, Po-Yuan Chu, Hsiu-Li Lee
• Format: Article
• Language: English
• Published: MDPI AG 2019-02-01
• Series: Sustainability
• Subjects: Activity-Based Costing (ABC); Industry 4.0; aluminum-alloy wheel industry; mathematical programming
• Online Access: https://www.mdpi.com/2071-1050/11/3/756

The industrial revolution has grown to the fourth generation, or so-called Industry 4.0. The literature on Industry 4.0 is quite extensive and involves many different dimensions; however, production costs under Industry 4.0 have seldom been discussed. On the other hand, environmental problems are increasingly serious nowadays. Activity-Based Costing is a mature accounting method that can easily trace direct and indirect product costs, based on activities, as well as trace the carbon tax to products, which may lead to different product combinations, in order to reduce environment problems. Thus, the purpose of this paper is to propose a green activity-based costing production planning model under Industry 4.0. In order to make the paper more realistic, we suggest three models with five possible scenarios: normal and material cost fluctuation, material cost discount, and carbon tax with the related cost function. The Aluminum-Alloy Wheel industry was chosen as the illustrative industry to present the results. The model provides managers with a way to deal with the cost problem under Industry 4.0 and to be able to handle the environmental issues in making production decisions. This paper also provides suggestions for governments that have not considered carbon taxation.