MODELING AND SIMULATION COST-TIME PROFILE OF BUSINESS

PROCESSES

Obrad Anii1, Sran Jovi2, Branko Pejovi3, Ljiljana Savi4, Miroslav Pavlovi5,
1

Faculty of Technical
Faculty of Technical
1
Faculty of Technical
1
Faculty of Technical
1
Faculty of Technical
1

Science, Kosovska Mitrovica, University of Pritina

Science, Kosovska Mitrovica, University of Pritina
Science, Kosovska Mitrovica, University of Pritina
Science, Kosovska Mitrovica, University of Pritina
Science, Kosovska Mitrovica, University of Pritina
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Abstract: New strategies and tools have been investigated constantly to improve processes, decreases cost and
increase productivity and efficiency. Scheduling of the production is one of the main element in the processes and has
an influence on delivery deadlines and also on the production process in terms of its application. For the lean
manufacturing efforts the values stream optimization is very important. The main aim of the paper is to research the
impact of business processes on value stream optimization and decreasing of cost-time investment. Mapping of the
value stream is a very efficient tool for the visualization of process activities within production flow focused on
activity duration with the purpose to eliminate non-value added activities. Costing of the value stream eliminated the
need for allocation and calculation. Cost-time profile is a powerful tool for visualization and calculation of cost
accumulation during the time across the entire business process flow. Lekin scheduling system is a software used in
this paper for construction of the process schedules based on four different rules. Cost-Time Profiler software is also
used for simulation of the influence of different process schedules on total production cost and cost-time investment.

Key words: model, simulation, process, cost-time profile, lean manufacturing.

1. INTRODUCTION
Modern business process have the conditions from the global market to force manufacturers to increase
competitiveness which can be achieved by developing flexible manufacturing systems, producing the high
quality products and reducing production costs. In the same time the manufacturers have to pay more attention
to producti variation, value of customers and delivery deadlines since mass production is not efficient at this
time. To increase production effectiveness, companies could select the strategy of constant improvement
through waste elimination. Process of the efficient production with high quality control has become very
important for bussiness processes in all comanies to meet customers satisfaction [1].
Reduction of the time and cost is the most important for every business process in companies hence the
monitoring and contorl of manufacturing cost over the time can be a good base for improvements. By using the
less consumable in manufacturing couls be a good strategy for money making an money savings could also be
achieved by preventing waste [2].
The customer value is the priority in modern economy as well as monitoring the cost of resources usage and
productivity. Higher output and higher productivity are achieved with overall added value by lead time
reduction, so manufacturers have to develop processes which could create its added value as fast as possible
[3]. With the implementation of modern business approaches, companies have to change business procedures
in general to be compatible with new manufacturing systems [4-5]. Information are the most important
resources in modern business environment, so information collection in the appropriate way is a big challenge
for companies. Information collection from the bussiness processes is mainly used in mass production and
product cost is the crucial fact for management. In many companies identification and recognition of the
complete value stresm is not applicable.
2. LEAN MANUFACTURING
Global competition is forcing many companies to adopt new approached for production such as lean
manufacturing to be more competitive. Lean production represents effor to achieve high effects with less
investment. Lean produciton is a multidimensional approach that merges toghether a different management
practices in on system. When the elements are properly implemented and connected the synergy can be created
with the high quality system with the level of production which is created accirding to the customer
requirements [6].
Lean manufacturing is comprehensive set of tools and techniques for waste reduction with the goal to
improve flexibility and effectiveness of a business system [7]. The basis of lean production is absolute waste
1

elimination and the main aims are cost reduction and increasing production system efficiency [8]. According to
the article [9] the lean production will be supplant mass production and other business approaches in all
industrial areas and become a standard global production system of the 21th century. Lean management
implementation is necessary in order to increas productivity, reduce costs, increase flexibility and create more
value for the customer [10].
2. VALUE STREAM COSTING
Many comanies had failures with lean production implementation becouse the traditional accounting system
is not based on lean principles and doesnt provide appropriate and timely information [11]. In traditional
business systems the mass production is supported and differences between direct and indirect costs are not
made. Assumption of long production runs is established in traditional cost systems. These systems will not be
applicable for new business conditions and environment [12]. To avoid potential conflicts with the lean
implementation, companies are starting to implement other accounting systems such as lean accounting in
order to solve the problems of overheas allocation.
Lean accounting was developed to support the lean manufacturing implementation based on mapping of
stream value. Therefore all cost become direct and their allocation along he stream value is shown in Figure 1
[13].

Fig. 1 Value strem cost [13]

3. COST-TIME PROFILE
Cost-time profile is a technique to measure process improvement or to select the right decision, which
should be applied in order to improve process. The cost-time profile can be defined as a diagram of cash
accumulation during each unit of time accross the entire business cycle and this profile is a cash oriented
diagram [14].
The main goal of cost-time profiling is the tracking the business activity as an accumulation of cost over
time. The cost-time profile is a graph that shows how much money was spent for the production of the product
and how much time elapes form process start to end until the money came back through the sale [15]. Costtime profile searches the new possibilities or process improvements and evaluates and selects the measurems to
achieve the improvement in business process.
Cost-time profile diagram requires the information about process, cost and activities and has three
components as shown in Figure 2:
1. Material inclusing services and information,
2. Labour activity performing,
3. Wait [16].

Fig. 2 Cost-time profile

4. BUSINESS PROCESS SCHEDULING
If comletion of a job is successful it means the job was within the planned time. All activities, operations
and processes in one company have to be scheduled in order to meet preoduction plans. Scheduling is one of
the most important toold in produciton planning and control becouse it defines arrangement of activities in
order to utilise time in optimal manner and comanies have to havelop good scheduler to be able to satisfy
changeable customer needs [17]. It is very difficult problem since it requires large combinatorial search space
[18]. The value stram mapping for a business process should be flexible to deal with the dynamic nature of job
shops [19].
5. PROBLEM DEFINITION
In this paper the main aim is to investigate the impact of changes in schedules on decreasing of total cost
and cost-tome investment. In other words the cost dimension is included of scheduling which depends depends
on beginning time of jobs and how long they are performing. Mapping of the value stream and job scheduling
have goals also to decrease lead time and production cost as well as to increase customer value. Cost-time
profile has aim to show cost accumulation during the time therefore this tool is used to simulate different
scenarios after implementation of different schedules.
In the beginning the 10 data sets are generated for a business job consisting of five machines and seven
business jobs in each data set. All 10 variants were examined and the reuslts were similiar and therefore in this
paper is presented one representative sample as it shown in Table 1. Rows in the right columns contain the
order of the operations for each job: each entry contains the index of machine and the processing time on it.
Table 1: Data about cost-time profile components
Jobs
A
B
C
D
E
F
G

Release date Due date

0
0
0
0
0
0
0

39
42
41
41
36
40
38

Machines/Processing
times
1/7 2/6 3/8 4/9 5/4
2/3 1/8 5/3 3/8 4/9
3/3 2/7 1/7 5/9 4/7
2/3 1/4 3/9 4/3 5/3
2/5 3/4 5/4 4/2 1/7
2/9 1/2 3/8 4/9 5/6
5/9 2/9 4/6 3/2 1/3

In the analysis very tight due dates are used to reflect the differences better. Due dates are related to the total
work content.
These inputs are used to calculate the beginning and the end time for each of these 7 business jobs. Three
dispathicng rules are applied:
1. Earliest Due Date,
2. Critical Ratio,
3. Minimum Slack First.
Lekin scheduling system is used in this stage of research to construct the schedules. Table 2 presents the

scheduling results.
Table 2: Output data from Lekin software

Jobs
A
B
C
D
E
F
G

Dispatching
rules
I
II
Start - End Start - End
0 - 41
0 - 72
41 - 90
9 - 77
0 - 74
0 - 54
31 - 70
39 - 62
0 - 22
25 - 57
22 - 58
0 - 48
0 - 33
0 - 50

III
Start - End
0 - 51
9 - 59
0 - 66
39 - 72
25 - 57
0 - 47
0 - 69

To visualize schedule and show how different rules cause different leas time, Gantt charts are presented for
above mentioned dispathing rules (Figure 3(a-c); rowsn show the utilisation of machines 1 to 5). Table 3
presents the summary of the various performance measures of the schedules.

Fig. 3 Grantt charts for applied rules: (a) rule I, (b) rule II and (c) rule III
Table 3: Output data from Lekin software
Rule

Makespan

I
II
III

90
77
72

Maximum
tardiness
48
35
31

Total number of
tardy jobs
5
7
7

The next step is calculating and simulating the cost-time profiles and cost-time investments under different
conditions defined by the schedules. Cost-Time Profiler software is used for this purpose for data capture,
calculations and graphic output. Other relevant data are assigned such as material cost and labout cost for each
job.
Data ibtained from Lekin software for the dispatching rules are used for determination of start time and
processing time for each job. The primary goal is to prove that scheduling has certain impact on investment.
Results of perfoming calculation and cost-time profile simulation are presented in the next four Figures 4-6.

Fig. 4 Cost-time profile for the dispatching rule I

Fig. 5 Cost-time profile for the dispatching rule II

Fig. 6 Cost-time profile for the dispatching rule III

5. CONCLUSION
Generally, tools for the cost-time profile, as well as lean accounting in general, have not been widespread
and widely accepted yet by companies, so popularization and proving of their imprtance are still a big
challange. Modern companies should be value oriented and implement those manufacturing and business
strategies that organize production in such a way that creates company.
This paper is focused on proving that scheduling has essential influence on changes of cost-time
investment. Original contribution of the paper is also the suggestion of an additional scheduling performance
measure in software solutions.
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