Warren%20SMChap27_12_.pdf - 557 CHAPTER 27(FIN MAN CHAPTER...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 557 CHAPTER 27 (FIN MAN); CHAPTER 12 (MAN) COST MANAGEMENT FOR JUST-IN-TIME ENVIRONMENTS EYE OPENERS 1. Just-in-time processing is a philosophy that focuses on reducing time, cost, and poor quality within manufacturing processes. The result of these efforts is a reduction in inven- tory levels. 2. Move time and wait time in inventory. 3. A product-oriented layout can be designed to minimize materials movements and re- duce (or eliminate) setup time. As a result, a product-oriented layout should have a shorter lead time than a process-oriented layout. 4. Long setup times lead to large production runs (batch sizes) in order to amortize the cost of the setup. Large batch sizes result in larger inventories, which in turn lead to long wait times. Thus, long setup times can lead directly to long lead times. 5. Pull or “make to order” manufacturing re- quires the manufacturer to build product only as it is needed for actual customer or- ders. As a result, finished goods, work in process, and materials inventories are minimized. Make to order manufacturing re- quires a high degree of flexibility and insig- nificant setup costs. 6. Product defects can cause additional costs and unpredictability in the process in the form of scrap, rework, record keeping, and inspection. In addition, product defects can cause a process to shut down, because there is very little work in process inventory to keep the next (downstream) operations running. Thus, a just-in-time manufacturer would wish to eliminate the negative conse- quences of product defects. 7. With supply chain management, long-term relationships are established with suppliers and customers to improve quality, cost, and delivery. Traditional relationships are usually focused on reducing price through supplier or customer competitive bidding. Thus, the traditional supplier and customer relation- ship can be very short-term oriented (until a better “deal” comes along). 8. Patients with common health problems are placed together on a floor (product-focused layout). Centralized services, such as X rays, are distributed to the floors. Cross- trained caregivers provide care, rather than many different spets . 9. A just-in-time environment will result in fewer (or no) work in process control points. As a result, there are no in-process transac- tions into and out of work in process inven- tory locations throughout the process. The just-in-time cost accounting system, termed backflush accounting, “pulls” cost from com- pleted production, rather than “pushed” through the plant, using materials requisi- tions or production orders. 10. The raw and in process inventory account combines the materials and work in process inventories because the materials are often introduced directly into the process. Thus, the materials are not recorded in a separate materials account before being introduced to work in process because there is no materi- als inventory....
View Full Document

This note was uploaded on 07/17/2011 for the course ACCT 102 taught by Professor Martinez during the Summer '11 term at Rio Hondo College.

Page1 / 46

Warren%20SMChap27_12_.pdf - 557 CHAPTER 27(FIN MAN CHAPTER...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online