A product-mix decision model using green manufacturing technologies under activity-based costing

The purpose of this study is to assess how the integration of activity-based costing (ABC) and the theory of constraints (TOC), as well as the application of a mixed-integer programming (MIP) model, can assist in making decisions about product-mix using green manufacturing technologies (GMTs). This study proposes a mathematical programming model to analyze the profitability of a product-mix decision based on the ABC and TOC, with the adoption of new GMTs. Using a numerical example from a metal component parts manufacturer in the automotive industry, the findings of this study provide insight into the value of mathematical programming approaches for GMTs investment and product-mix decision making based on ABC systems while simultaneously improving the value of green manufacturing technology investments.