Simulation-Based Environmental Analysis for Production Lot-Size Determination in Terms of Material Flow Cost Accounting

In the modern manufacturing industry, environmental considerations are part of numerous phases of production. Inappropriate production lot-size determination can generate substantial scrapped overdue stocks and idle processing, which lead to serious environmental burdens. In this paper, Material flow cost accounting (MFCA), an environmental management accounting method, is adopted to reduce the amount of wastes that result from large overstocks and other wastes caused by current production lot-size determination are traced. For comparison with the conventional cost accounting used in the original simulation model, MFCA can identify negative products cost related to environmental impacts hidden in the production processes. Moreover, it is demonstrated that the proposed procedure of application of simulation with MFCA can also perform a dynamic analysis and a static analysis.