Measuring and Managing Process Performance

Takeaway Sad Chapters vigilance Accounting Information for Activity and mathematical operation Decisions After reading this chapter, you willing be able to 1) define sunk cost and explain wherefore sunk costs ar not relevant. 2) analyze make-or-buy decisions. 3) demonstrate the work of qualitative factors In making decisions. 4) compare the different types of faculties layouts. 5) expelled the theory of constraints 6)demonstrate the mensurate of Just- In-time manufacturing systems, 7)describe the concept of the cost of quality. ) calculate the cost savings resulting from reductions In Inventories,reduction In reduction cycle time, product yields improvement, and reductions in rework and defect rates. 2 defraud Case For 50 years,the Tabor Toy Company had been producing high-quality plastic toys for children. In early 2006,Tabor experienced a large drop In sales and market share, After some Investigations,TLS loss was attributed to a significant decreases In the quality of the product and to general delays In getting It to customers.After several weeks jibe study,Don and a cross-functional team tot management personnel documented and numerous shop floor problems. Don Pipeline,senior managers report to top management raise several questions. . Should many of the existing machines,including the major unaccommodating machine essential be replaced. 2. What should the company do about the local vendor who produced the amiss(p) computer chips? 3. WSDL It make sense to Implement an entirely new production process such as SIT? This chapter presents three types of facility designs(l) Process layouts?2)product layouts,and manufacturing-all it which can be used to help organizations reduce costs. We follow this with a discussion of how organizations can reduce costs by ensuring that they focus on improving the quality of their processes. Finally the SIT manufacturing system is presented as a system that integrates many of the ideas we discuss in the chapter. 1 ?valuation monetary Implications(p. 208) Managers must evaluate the financial implications tot decisions that require trade- offs between the costs and the benefits of different alternatives.Equally important,they must recognize that some costs and revenues are not relevant in such evaluations. 4)Assuming Responsibility for Decisions On a technical foul level,the correct decision for Bonnier Company is to dispose of the machine and replace ithowever,because they are concerned about their reputations within their own organizations,not all managers would do so. 8 3 Make or Buy Decisions Management accountants often come out information about relevant costs and revenues to help managers make specific one-time decisions. One example is a make- or-buy decisions.As managers attempt to reduce costs and improver the competitiveness of their products, they face decisions about whether their companies should manufacture some parts and components for their products in- field of operations or subcontract with another company to supply these parts and components. show 5-3 displays details of the two lowest equates from outside suppliers for a representative lamp in each of the four product lines manufactured in-house. The should accept the outside instruction and terminate the in-house production of these product? 9 Exhibit 5-3 Somers motors,Len.