TITLE:
Improving Costing in the Food Production and Service Industry Supply Chain (A Case Study Based on Activity-Based Costing)
AUTHORS:
Luvsandash Oyuntsetseg, Shurenchuluun Tserendulam, Baljir Khishigtogtokh
KEYWORDS:
Supply Chain, Cost Calculation, Activity-Based Costing (ABC), Analytic Hierarchy Process (AHP), Sphere Packing Approach (Set), Food Production and Service
JOURNAL NAME:
Open Journal of Business and Management,
Vol.14 No.2,
March
13,
2026
ABSTRACT: In recent years, supply chain disruptions, rising raw material prices, and food inflation have exerted significant pressure on the profitability of organizations within the food production and service industry. In this context, accurately determining supply chain costs and optimizing cost management have become critical factors for ensuring organizational sustainability and competitiveness. However, in practice, many organizations continue to use traditional costing methods, which often fail to fully capture the indirect and hidden costs incurred throughout the supply chain process. The purpose of this study is to identify the cost structure within the supply chain of the food production and service industry and to explore opportunities for optimal cost management. Using a case study methodology, Sangyeopsal Express restaurant, operating in Ulaanbaatar, was selected as the research object. The Activity-Based Costing (ABC) method was used to determine costs, the Analytic Hierarchy Process (AHP) was used to evaluate the significance of expenses, and the Sphere Packing Approach (SPA) modeling was used to optimize costs. The research findings indicate that raw material procurement, labor costs, and utility expenses account for the majority of the total supply chain cost. By integrating ABC and SPA, the actual cost structure becomes transparent, enabling decision-making aimed at monitoring and reducing costs to feasible levels. This study investigates practical significance for refining supply chain cost calculations within the food production and service industry.