Beruflich Dokumente
Kultur Dokumente
Chapter 17
Inventory and
Production Management
Learning Objectives (1 of 3)
• List the most important relationships in th
e value chain
• Explain why inventory cost management i
s important
• Contrast the push and pull systems of prod
uction
• Explain why product life cycles affect pro
duct costing and profitability
Learning Objectives (2 of 3)
• Define target costing and explain how it influe
nces production cost management
• Describe the just-in-time philosophy and expla
in how it affects accounting systems
• Describe flexible manufacturing systems
Learning Objectives (3 of 3)
• Explain how the theory of constraints helps
in determining production flow
• (Appendix) Illustrate how the economic ord
er quantity, reorder point, and safety stock a
re determined and used
Managing Inventory
The goal is to minimize the compan
y’s monetary commitment to inven
tory without negatively impacting
product availability
Inventory
Types Costs
• Raw material • Purchasing/production
• Work in process • Ordering/setup
• Finished goods • Carrying/not carrying
• Indirect materials (sup
plies)
• Merchandise inventor
y
Production Systems
• Push Systems
– Produce in anticipation of customer orders
– Store raw material, work in process, and finishe
d goods inventory
• Pull
– Produce as needed
– Minimal storage
Product Life Cycles
S
A
L
E
S
TIME
Development Stage
• Decisions made during the development sta
ge represent 80 to 90 percent of product’s to
tal life-cycle costs
• Development (R&D) costs expensed as incu
rred in financial accounting
Introduction Stage
• Increased sales
• Quality may improve
• Prices stable Growth
Stage
S
A
L
E
S
TIME
Maturity Stage
• Sales stabilize or decline slowly
• Firms compete on selling price
• Costs at lowest level Maturity
Stage
S
A
L
E
S
TIME
Decline Stage
• Waning sales
• Dramatic price cuts
• Cost per unit increases as fixe Decline
d costs are spread over fewer Stage
units
S
A
L
E
S
TIME
Just-in-Time
• Eliminate any process or operation that
does not add value
• Continuous improvement in productio
n/performance efficiency
• Reduction in total cost of production/p
erformance while increasing quality
Traditional Manufacturing
• Smooth operating activity
– steady use of workforce
– continuous machine utilization
• Spread overhead over a maximum number o
f products
• Inventory levels high enough to cover up in
efficiencies in acquisition and/or production
JIT Plants
• Minimize material handling time, lead time, move
ment of goods
• Use manufacturing cells which allow for visual con
trols, greater teamwork, quick exchange of vital inf
ormation
• Reduce storage
• Increase throughput
• Develop multiskilled workers
• Use autonomation – programmed factory equipmen
t
Manufacturing Methods
Flexible Manufacturing Sy Computer-Integrated Ma
stem (FMS) nufacturing (CIM)
• network of robots and m • two or more FMSs con
aterial conveyance devic nected via host comput
es monitored and control er and information sys
led by computers tem
• modular factories
• customization
• quick, inexpensive produ
ction changes
Theory of Constraints (TOC)