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Production‐cost duality was first introduced by Ronald Shephard (1953) in his seminal study, Cost and Production Functions. The application of duality to production and cost was extended by Uzawa (1962, 1964). However, not until the 1970s did the Shephard‐Uzawa duality analysis achieve its influential role in modern microeconomic thought. In simple words, the Shephard‐Uzawa duality theorem indicates that a firm's cost function summarizes all of the relevant features of the production technology, whereas the firm's production function contains all of the relevant features of the cost function for each set of input and output prices. If certain standard technical conditions (i.e., relating to convexity and continuity) are satisfied, then the theorem implies that there is a one‐to‐one relationship between points on the cost surface and points on the production surfaces.

When is it more profitable for multinational manufacturers to manufacture in high-cost environments and when in low-cost environments? While the literature offers many cues to answer this question, too little empirical research directly addresses this. In this study, we quantitatively and empirically investigate the financial effect of companies' production footprint in low-cost and high-cost environments for different types of production networks.

Using the data of 770 multinational manufacturing companies, we analyze the relationship between production footprints and profitability during four calendar semesters in 2018 and 2019 (N = 2,940), investigating the moderating role of companies' production network type.

We find that companies with networks distinguished by both high levels of product complexity and process sophistication profit the most from producing to a greater extent in high-cost countries. For these companies, shifting production to low-cost countries would be associated with negative performance implications.

Our findings suggest that the production geography of companies should be attuned to their network type, as defined by the companies' process sophistication and product complexity. Manufacturing in low-cost countries is not always the best choice, as doing so can adversely affect profits if the products are highly innovative and the production processes are complex.

We contribute to the scarce empirical literature on managing global production networks and provide a data-driven analysis that contributes to answering some of the enduring questions in this critical area.

Develops a linear programming model for integrated production planning based on the practice of a major Canadian steel making company. Considers the entire planning activity in the company as an integrated process involving a number of closely related sub‐functions, such as raw material purchasing, semi‐finished product purchasing and production, and capacity allocation, as well as finished product production and distribution. The mathematical programming model takes into account production costs, product throughput rates, customer demands, sales prices and facility capacities for optimal production planning. Presents a numerical example based on realistic system structure and practical planning data to illustrate the model. Computation results and analysis show that the integrated methodology is a feasible and practical approach for steel production planning.

An entrepreneur needs a tool on an enterprise level to determine opportunities and threats in a global perspective. The production‐allocation approach described in this article could be such a tool in developing a firm′s international manufacturing strategy. The approach is built around the production and cost function for the relevant manufacturing systems in the integral production chain for a specific product. The main question then is to determine the optimum location of the various manufacturing systems. In this article, the optimum location is the one which minimises the sum of manufacturing and transport costs. A case study based upon research for a European producer of foodstuffs is presented to illustrate the concepts of the production‐allocation approach.

This paper aims to overcome the inability of both comparing loss costs and accounting for production resource losses of Overall Equipment Effectiveness (OEE)-related approaches.

The authors conducted a literature review about the studies focusing on approaches combining OEE with monetary units and/or resource issues. The authors developed an approach based on Overall Equipment Cost Loss (OECL), introducing a component for the production resource consumption of a machine. A real case study about a smart multicenter three-spindle machine is used to test the applicability of the approach.

The paper proposes Resource Overall Equipment Cost Loss (ROECL), i.e. a new KPI expressed in monetary units that represents the total cost of losses (including production resource ones) caused by inefficiencies and deviations of the machine or equipment from its optimal operating status occurring over a specific time period. ROECL enables to quantify the variation of the product cost occurring when a machine or equipment changes its health status and to determine the actual product cost for a given production order. In the analysed case study, the most critical production orders showed an actual production cost about 60% higher than the minimal cost possible under the most efficient operating conditions.

The proposed approach may support both production and cost accounting managers during the identification of areas requiring attention and representing opportunities for improvement in terms of availability, performance, quality, and resource losses.

Equipment performance helps the manufacturing sector achieve operational and financial improvements despite process variations. However, the literature lacks a clear index or metric to quantify the monetary advantages of enhanced equipment performance. Thus, the paper presents two innovative monetary performance measures to estimate the financial advantages of enhancing equipment performance by isolating the effect of manufacturing fluctuations such as product mix price, direct and indirect characteristics, and cost changes.

The research provides two measures, ISB (Improvement Saving Benefits) and IEB (Improvement Earning Benefits), to assess equipment performance improvements. The effectiveness of the metrics is validated through a three stages approach, namely (1) experts' binary opinion, (2) sample, and (3) actual cases. The relevant data may be collected through accounting systems, purpose-built software, or electronic spreadsheets.

The findings suggest that both measures provide an effective cost–benefit analysis of equipment performance enhancement. The measure ISB indicates savings from performance increases when equipment capacity is greater than product demand. IEB is utilised when equipment capacity is less than product demand. Both measurements may replace the unitary cost variation, which is subject to manufacturing changes.

Manufacturing businesses may utilise the ISB and IEB metrics to conduct a systematic analysis of equipment performance and to appreciate the financial savings perspective in order to emphasise profitability in the short and long term.

The study introduces two novel financial equipment performance improvement indicators that distinguish the effects of manufacturing variations. Manufacturing variations cause cost advantages from operational improvements to be misrepresented. There is currently no approach for manufacturing organisations to calculate the financial advantages of enhancing equipment performance while isolating production irregularities.

This paper focuses on the determination of the cost completion rate used to calculate the equivalent units of production in a continuous process costing system. The paper aims at two research questions. What procedures do companies utilize in practical terms? How should the completion level percentage be calculated conceptually?

The study is a qualitative exploratory survey. The companies targeted were those noted in “Melhores e Maiores,” a ranking of the best and biggest Brazilian companies. A total of 175 questionnaires were sent to pre‐selected enterprises, each with revenues of more than US$100 million per year, and 50 usable responses were returned.

A literature review of the theoretical procedures used for continuous process costing revealed no indication of an objective method for determining the completion level. The empirical research in the present study confirmed that, in practice, companies do not adopt the general procedures proposed by the theory. The best practices applied by the companies have been shown to be an adequate alternative, because the results are identical to those obtained with the proposed method.

The study bears the usual limitations of a qualitative exploratory survey regarding its generalization to other companies.

The originality of the study is based on the assumption that cost accounting theory does not offer an objective solution for the computation of the completion level percentage and, consequently, that companies in continuous process production system do not adopt the theoretical concepts with respect to inventory evaluation of goods‐in‐process and finished goods.

This paper aims to provide an integrated production-routing model in a three-echelon supply chain containing a two-layer transportation system to minimize the total costs of production, transportation, inventory holding and expired drugs treatment. In the proposed problem, some specifications such as multisite manufacturing, simultaneous pickup and delivery and uncertainty in parameters are considered.

At first, a mathematical model has been proposed for the problem. Then, one possibilistic model and one robust possibilistic model equivalent to the initial model are provided regarding the uncertain nature of the model parameters and the inaccessibility of their probability function. Finally, the performance of the proposed model is evaluated using the real data collected from a pharmaceutical production center in Iran. The results reveal the proper performance of the proposed models.

The results obtained from applying the proposed model to a real-life production center indicated that the number of expired drugs has decreased because of using this model, also the costs of the system were reduced owing to integrating simultaneous drug pickup and delivery operations. Moreover, regarding the results of simulations, the robust possibilistic model had the best performance among the proposed models.

This research considers a two-layer vehicle routing in a production-routing problem with inventory planning. Moreover, multisite manufacturing, simultaneous pickup of the expired drugs and delivery of the drugs to the distribution centers are considered. Providing a robust possibilistic model for tackling the uncertainty in demand, costs, production capacity and drug expiration costs is considered as another remarkable feature of the proposed model.

Practitioners often are confused by theories that offer ambiguous prescriptions for designing the institutional forms or governance structures in which business activities are conducted. Unclear prescriptions for organizing tasks within the main governance alternatives leave key design decisions unguided: which tasks to perform in‐house (hierarchy), which to contract to outside agencies (market), and which to perform jointly by economic units within and outside the firm (hybrid)? A popular current theory ‐ transaction cost analysis ‐ suggests that governance structures should be aligned to tasks in a “mainly transaction cost economizing way.” Argues that the importance of transaction costs is overstated, and that observed patterns of firms’ governance structures suggest that firms also account for other theoretical issues ‐ production costs and strategic considerations ‐ in determining efficient boundaries. Begins by illustrating that transaction costs are not always primary. Then discusses the factors that impact production costs and transaction costs, and reviews certain strategic considerations that impact the choice of governance structure for a task. Offers practitioners guidance in choosing governance structures through a contingency analysis that examines the interaction of production costs, transaction costs, and strategic considerations. Illustrates normative implications for designing governance structures through corporate examples that are driven by both cost and strategy considerations.