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Introduction
Ideally, to make product mix decisions, managers need cost information from the accounting information system, production data from the manufacturing information system, and demand forecast information from the marketing information system. However, non-optimal decisions are often made from insufficient information or from using inaccurate or outdated data due to poor communication and integration among information systems across different functional areas or because of the difficulty of obtaining cross-functional data ([22] Lea et al. , 2005). With a common database and real-time information sharing, an enterprise resource planning (ERP) system makes it possible to use real-time data from different functional areas in decision making to prevent inferior decisions being made from obsolete or outdated data ([22] Lea et al. , 2005).
However, management accounting systems that provide cost information for various decisions are seldom a choice when making ERP implementation decision or in most commercial ERP packages. This is because of the misconception that management accounting systems are used only to report profitability, and the lack of understanding on how the management accounting system interacts with the manufacturing system to influence performance. On the manufacturing side, the reported benefits from the ERP implementation include quick information response time, shortened order cycle, improved on-time delivery, lowered inventory, and reduced operating costs ([36] Mabert et al. , 2000; [22] Lea et al. , 2005). However, the majority of ERP literature focus on issues related to ERP implemented and installation. Few systematic studies that examine how the common database and real-time information sharing features of an ERP system influence manufacturing performance exist.
This study is designed to show how management accounting systems affect management decisions and consequently influence manufacturing performance over time. By utilizing the real-time information sharing feature of an ERP integrated environment, this study examines how management accounting systems affect product mix decisions through product cost calculations, and consequently influence manufacturing performance over time. To make direct comparison possible, the computer simulation is used to replicate an ERP integrated factory operated in both traditional manufacturing resource planning (MRP) and theory of constraints (TOC) environments. The results of this study will help managers to identify an appropriate management accounting system to determine optimal product mix in a constrained environment in order to provide the right goal for...