Solved: Shapiro Company a manufacturer of small tools

implemented lean
Shapiro Company a manufacturer of small tools implemented lean

Shapiro Company, a manufacturer of small tools, implemented lean manufacturing at the end of
2009. The company’s goal for the year was to increase the return on sales to 40 percent of
sales. A value stream team was established and began to work on lean improvements.
During the year, the team was able to achieve significant results on several fronts. The following
Box Scorecard reflects the performance measures at the beginning of the year, midyear, and
end of year. Although the team members were pleased with their progress, they were
disappointed in the financial results. They were still far from the targeted return on sales of 40
percent. They were also puzzled as to why the improvements made did not translate into
significantly improved financial performance.

Required:
1. From the scorecard, what was the focus of the value stream team for the first six months?
The second six months? What are the implications of these changes?
2. Using information from the scorecard, offer an explanation for why the financial results were
not as good as expected.
3. Suppose that on December 31, 2010, a potential customer offered to purchase an order of
goods that would increase weekly revenues in January by $100,000 and material cost by
$30,000. Using the old standard cost system, the projected conversion cost of the order would
be $60,000. Would you recommend that the order be accepted or rejected?Explain.

Shapiro Company a manufacturer of small tools implemented lean

ANSWER
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