OPT, Activity Based Costing, and the New Theory of Manufacturing

Document Type

Closed Project

Publication Date

Fall 1993


Richard R. Deckro

Course Title

Manufacturing Systems Simulation

Course Number

EMGT 510


The traditional view of cost accounting and of manufacturing as separate entities within a manufacturing company is outdated and useless today. Both OPT (Optimized Production Technology) and ABC (Activity Based Costing) show great promise as replacements. They have their drawbacks, though, when used independently of one another. Used together they can lead to great improvements, but they require a philosophical shift in the way manufacturing operations are viewed. Recognizing that the manufacturing arm of an organization is an integrated component of the whole system, with impacts on every facet of the organization is necessary to ensure survival in today's increasingly competitive environment.


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