...There are many different ways to generate ideas. You can use the problem-based concept generation. Using this format, the idea is generated because a problem exits. Using internal company records, input from technical and marketing teams, and most importantly, customer feedback, the problem is identified, and ideas are generated that may be a solution to the specific problem. Although this is a great way to generate ideas, it is not the ideal format for Chocoberry. Chocoberry’s ‘problem’ is an internal one. They want to expand their market and reach customers, as opposed to dealing with just businesses. For this reason, there is no problem they are trying to fix. They are simply trying to come up with a new idea, so problem-based concept generation is not ideal in this situation. One of the most popular methods for idea generation is brainstorming. There are several different options when brainstorming, which eventually lead to the same end result- a concept for a product. Some of the methods of brainstorming include the traditional brainstorming circle, brainsketching, speedstorming, electronic brainstorming, Phillips 66 groups, and the Delphi method of brainstorming. All methods have pros and cons associated with each. One of the most relevant cons associated with brainstorming is the bazooka effect. The bazooka effect occurs when an idea is presented during brainstorming, and someone else shoots it down without even considering it (142). This can cause the participants...
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...labor, direct materials, and fixed and variable manufacturing overhead costs are traced to every finished product. Thus, in the absorption costing system, all costs are product costs regardless of their classification of variable or fixed. Because of its characteristic of no cost discrimination, absorption costing is also known as full costing or as full absorption method (¨Absorption¨ 1). The absorption costing is the only method approved by the generally accepted accounting matching principle (GAAP). Thus, it is required by law to use this system for external financial statements (Lohrey 1). The absorption costing also provides accuracy of the calculation in taxes reporting (1). Experts say that the absorption costing method provides a complete picture of cost calculation and it is helpful to accurately track profit during an accounting period (Cunagin 1). In fact, this method is in compliance with the GAA matching principle which states that all expenses and revenues must be reported in the same period (Lohrey 1). Production Process A simplified production process starts with the purchase of direct materials and ends with the sale of the finished goods. To account this process the following steps should be made. When the direct materials are purchased, they are recorded as assets. When the direct materials are placed into production, the costs are recorded in a work-in-process account which is also an asset (1). In the manufacturing, as direct labor is incurred, they are transferred...
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...University of Central Missouri Submitted to Ms. M. Joleen Byerline Department of Industrial Management UNIVERSITY OF CENTRAL MISSOURI Abstract The prime objective of this paper is to find out the lean manufacturing adaptation hurdles in SMEs. In this study, a few SMEs are consider for experimental study and we can understand the overall idea about the ideology of SMEs functioning. Lean manufacturing is based on the principle of getting the same result with less human interference as well as less machine and material involvement. The scope of lean implementation is not only restricted to automotive industry but also has recognition in manufacturing industries in US. The in information in this study is collect from the professionals who have implemented and those who did not implemented the lean manufacturing tools in business. The research speaks some of the barriers, which came across while adopting manufacturing technique. Keywords: SMEs, Lean-manufacturing implementation, General view about Lean, Productivity. TABLE OF CONTENTS 1.0 INTRODUCTION 1.1 Introduction………………………………………………………… 4 1.2 Statement of Problem………………………………………………. 5 1.3 Purpose of Study……………………………………………………. 5 1.4 Research Questions………………………………………………….. 6 1.6 Hypothesis……………………………………………………………...
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...Case 6-3 Report Charles Crutchfield, manager of manufacturing operations at Morgan Manufacturing, was concerned with the health of the operating aspects of the business. And Westwood, Inc. was Morgan Manufacturing’s major competitor. According to the financial statements, Edward Drewery, controller of Morgan Manufacturing, stated the reason why their operations were less efficient than Westwood’s might be their different method to account for inventory. Over 2006, Morgan Manufacturing implemented significant productivity improvements over Westwood. But these improvements were not reflected in the financial statements (Exhibit 1). Morgan Manufacturing used LIFO as its inventory costing method, while Westwood used FIFO. Additionally, comparison of three key ratios indicated relative differences between these two competitors: gross margin percentage, pre-tax return on sales, and pre-tax return on assets. And calculations of these three ratios are below: Ratio | Calculation | Gross margin percentage | Gross margin/ Sales | Pre-tax return on sales | Income before tax/Sales | Pre-tax return on assets | Income before tax/ Total assets | Based on the two different methods they used to account for inventory, here is the 2006 comparison of the three ratios between Morgan Manufacturing and Westwood: Ratio | Morgan Manufacturing | Westwood, Inc. | Difference | Gross margin percentage | 44.5% | 45% | -0.5% | Pre-tax return on sales | 14.5% | 15% | -0.5% | ...
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...both concepts determine which method is more superior for the business. Traditional costing concepts Traditional costing is to consider how much will cost to produce a product. It plays an important role in the business to predicting the profitability of a product. Traditional costing is also well known as the conversional method costing, which refers to the allocation of manufacturing overhead costs to the product manufactured (Harold, n.d.). Traditional costing assigns manufacturing overhead on the basis of volume of a cost driver, such as direct labor hours, production machine hours or direct material hours, all of which are needed to produce an item and the number of units produced. Different from activity- based costing, traditional costing is emphasis on costing information of external financial report in the business, because it provides the value of cost of goods sold. Many manufacturing companies use traditional costing system in order to divide the total cost of a product by the direct labor cost. Generally, the traditional costing method users make the assumption that the volume metric is the underlying driver of manufacturing overhead cost. Hence, under traditional costing method, accountants regard manufacturing costs only to product. Whereas, some cost such as administrative expenses are allocated as non-manufacturing cost and they are also associated with product of an item, which still cannot be assigned into traditional costing method. ABC concept ABC system...
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...yu March, 2012 Product Costing - Best Practices by Heering Ligthart On Manufacturing Accounting Editor's Note: There's so much to think about with product costing: the amount of detail you'll need, maintaining master data, variances… the list can go on. This article by Heering Ligthart discusses some key topics for managing Product Costing efficiently. He'll cover best practices in costing security, using "Last In" calculation, working with multiple branches, and finally recording and finding historical costs. Introduction I have implemented JD Edwards Manufacturing and Distribution modules at several companies and have found that there are always questions surrounding product costing setup. Cost components are essential for controllers to determine the costs for manufactured items. This raises some questions. For instance, how much detail regarding product cost do you want to keep? And how will you maintain the master data on product cost, keeping the different cost Cost components are essential for variances within boundaries and to a minimum controllers to determine the costs for to keep the costs in line with reality? manufactured items. This article highlights key topics for managing Product Costing using JDE, while keeping the costing understandable. Although the scenarios used in the article all contain a manufacturing branch with different distribution branches, most topics are applicable to distribution branches as well. While cost price programs and batches...
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...traditional approaches to overhead cost analysis. A traditional approach is a costing method that is used to allocate manufacturing costs to specific products. It uses single cost driver such as machine hours, direct labour hours to allocate indirect manufacturing costs. Traditional costing approaches can referred as the conventional method. However, there are many cost drivers in reality when factory overhead occurred, such as machines setups, or inspections. Since it missed out the others cost driver, it may fail to identify opportunities for cost efficiency, or allocate inaccurate per-unit cost, subsequently will results the managers unable to make a clear and strategic decision during costing. Nevertheless, traditional costing approaches also may not take into account consumer demand or unique features of product; it might reduce the improvements of the organization. Even though traditional approaches may easy to apply in each size of manufacturing business, yet it will become less reliable due to increased in the level of diversity of output rises and the level of complicated of manufacturing project. For example, if a business that has a lot of overhead expenses, it needs a more reliable and accurate costing approaches to identify or allocate the overhead costs to different products. If the costs and prices allocated incorrectly will causes the competitive position affected. Manufacturing environment has tried hard to find out the efficiency and effectiveness way to complete...
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...Advanced Manufacturing Series Editor Professor D. T. Pham Intelligent Systems Laboratory WDA Centre of Enterprise in Manufacturing Engineering University of Wales Cardiff PO Box 688 Newport Road Cardiff CF2 3ET UK Other titles in this series Assembly Line Design B. Rekiek and A. Delchambre Advances in Design H.A. ElMaraghy and W.H. ElMaraghy (Eds.) Effective Resource Management in Manufacturing Systems: Optimization Algorithms in Production Planning M. Caramia and P. Dell’Olmo Condition Monitoring and Control for Intelligent Manufacturing L. Wang and R.X. Gao (Eds.) Optimal Production Planning for PCB Assembly W. Ho and P. Ji Trends in Supply Chain Design and Management H. Jung, F.F. Chen and B. Jeong (Eds.) Process Planning and Scheduling for Distributed Manufacturing L. Wang and W. Shen (Eds.) Collaborative Product Design and Manufacturing Methodologies and Applications W.D. Li, S.K. Ong, A.Y.C. Nee and C. McMahon (Eds.) R. Venkata Rao Decision Making in the Manufacturing Environment Using Graph Theory and Fuzzy Multiple Attribute Decision Making Methods 123 R. Venkata Rao, PhD Department of Mechanical Engineering Sardar Vallabhbhai National Institute of Technology, Surat Ichchanath Surat 395 007 Gujarat State India British Library Cataloguing in Publication Data Rao, R. Venkata Decision making in the manufacturing environment : using graph theory and fuzzy multiple attribute decision making methods. - (Springer series in advanced manufacturing) 1. Production...
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...there is still a single nature and because of activity in low – risk with middle income, this industry does not have the ability to compete in highly competitive markets. More investment on the national car with quite unique coordinates and quality and prepare the low risk financial resources are the needs of the industry in the global economy. Introduction It is essential to do futurology studies in order to evade passivity and choosing appropriate strategies for having the proper position. Iran's automotive industry is one of the countries industrial development strategic choices. Hence an analysis of automotive industry and its presence in the world economy was offered from the viewpoint of play theory. It is supposed that changing methods of production and stockpiling as chaotic...
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...Conclusion…………………………………………………………. 18 References……………………………………………………………… 18 Introduction JCR Drillsol PVT.LTD JCR is a large scale manufacturing company who’s objective is to provide unique and unprecedented solutions in every arena of the Drilling, Mining and Construction Industry. JCR’s variety of specialized RIGs finds its application in every possible arena of the drilling industry, making them one of the most competitive services in the business. JCR Drillsol, products include highly efficient and heavy-duty RIGs for a wide range of drilling applications ranging from RC, DTH, Tractor mounted and Wagon Drills, Pumping and Testing Units to Drag Bits, Mud Pumps and Mini Truck Mounted Drills. Our technology also designs other drilling solutions such as DTH Hammers, RC Hammers, RC Drill Rods, Tricone and O-Dex Bits. Problems faced in the industry Various problems faced by the industry are: * Material Wastage and Cost Factor A major problem faced by JCR Drillsol is the wastage of materials and cost factor. The Product output per unit input of raw materials became lower. It also occurred due to heavy inventory. It also occurred due to bad process design and layout. The other factor, which leads to material wastage, was bad quality from process and design. Hypothesis: Lean Manufacturing can be used to eliminate the wastage of materials that reduces the cost per unit of raw materials. A proper management of inventory for the industry can...
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...product manufacture by either a capital-intensive method or a labor-intensive method. Provided are the manufacturing cost for both methods as well as the estimate. The capital-intensive manufacturing cost estimates are as follow: $5.00 per unit for direct materials, $6.00 per unit for direct labor, $3.00 per unit for variable overhead, and $2,508,000 for fixed manufacturing cost. The labor-intensive manufacturing cost estimates are as follow: $5.50 per unit for direct materials, $8.00 per unit for direct labor, $4.50 per unit variable overhead, and $1,538,000. The company’s research department recommends an introductory unit sale price of $30. The incremental selling expenses are estimated to $502,000 annually plus $2.00 for each unit sold, regardless of which manufacturing method is used. Capital-intensive methodologies of production require higher levels of labor. A: The estimated break-even point in annual unit sales of the new product is calculated differently dependent on the used method. 1.) With the capital-intensive method, the Martinez Company must calculate total fixed cost first; $2,508,000+$502,000=$3,010,000. The contribution margin per unit must also be calculated through selling price less variable cost ($30-$5-$6-$3-$2=$14). Total fixed cost over contribution margin per unit determines the break-even point in unit sales under the capital-intensive method as 215,000 ($3,010,000/$14). 2.) With the labor-intensive method, the Martinez Company follows similar calculations...
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...treatment of constipation for the Australian and New Zealand market. The methods used on this evaluation include discounted cash flow analysis, where an investment is valued by discounting its future cash flows. Also, net present value, which is considered to provide the most accurate evaluation of this investment as it precisely, determines the increase in value of shareholders capital by evaluating the profitability of the project. Finally internal rate of return, which is an important method of analyse in percentage. Furthermore, the project should be accepted if the IRR of an investment exceeds its required return. Along with the base calculation, the report is taking into consideration few different calculations, where Miguel and Freddy believe that sales could be 10% higher and also Anna’s opinion, where sales could be overestimate by 5%. Moreover, the report also includes calculations where contract manufacturing sales are not included in the base case, best case at 10% and worst case where Anna defends an overestimation of 5%. The results presented by the sales analysis take into consideration the following assumptions and considerations: 1) Base case with and without contract manufacturing with another companies, an optimistic approach (best scenario) with higher sales volume by 10% with and without contract manufacturing and a less optimistic approach with and without contract manufacturing with a reduction in sales by 5%; 2) Adjustments on variable costs...
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...Holly Manufacturing Case Study Holly Manufacturing Company produces two cello models. One is a standard acoustic cello that sells for $600 and is constructed from medium-grade materials. The other model is a custom-made amplified cello with pearl inlays and a body constructed from special woods. The custom cello sells for $900. Both cellos require 10 hours of direct labor to produce, but the custom cello is manufactured by more experienced workers who are paid at a higher rate. Most of Holly’s sales come from the standard cello, but sales of the custom model have been growing. Following is the company’s sales, production, and cost information for last year: Cello Standard Custom Sales and production volume in units 900 100 Unit Selling Price $600.00 $900.00 Unit costs: Direct materials $150.00 $375.00 Direct labor $180.00 $240.00 Manufacturing overhead* $135.00 $135.00 Total unit costs $465.00 $750.00 Unit Gross Profit $135.00 $150.00 Direct Labor Hours 10.00 10.00 Direct Labor Rate Per Hour $18.00 $24.00 * Manufacturing overhead costs: Building depreciation $ 40,000 Maintenance 15,000 Purchasing 20,000 Inspection 12,000 Indirect materials 15,000 Supervision 30,000 Supplies 3,000 Total manufacturing overhead costs $135,000 Selling...
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...Question One PART A Different approaches Munir can use to estimate a cost function are; a. Industrial engineering method which estimates cost function by analysing relationship between inputs and outputs in physical terms. It is thorough, detailed way to estimate cost but very time consuming and too costly. b. Conference method estimates cost functions based on analysis and opinions about costs and their drivers from various departments within the company. c. Account analysis method estimates cost functions by classifying accounts into variable, fixed or mixed with respect to identified level of activity. Reasonably accurate, cost effective and easy to use. d. Quantitative analysis method uses formal mathematical models to fit cost functions to past data observations. Most common methods used are high low and regression analysis. PART B A. Cost estimation method used by Miller’s Good Value Appliance Store is the account analysis method. B. Variable costs Variable costs Cost of Goods Sold 540,000 Commission on sales 67,500 $ 607,500 Variable cost per unit = 607,500 = $121.50 per unit 5,000 C. Total estimated costs for 6,500 units Fixed costs Store manager salary 75,000 Operating costs per year 225,000 Advertising and promotion 25,000 $ 325,000 Estimated costs = $325,000 + ($121.50 per unit x 6,500 units) = $1,114,750 Question...
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...Product vs. Service Supply Chain Whether tangible products or intangible services, both manufacturing and service industries use different inventory strategies to deliver quality end results to consumers. Supplying a service or a product impacts forecasting and resourcing decisions in different ways. The objectives of the service industry remain similar to the manufacturing industry, fulfilling wants or demands of customers are impacted by the strategies that organizations choose to follow. In the manufacturing industry, raw material, work in progresses, sub-components and finished goods are stored at the company’s expense to meet the demands of its customers. Stock that is held to meet demands is also knows as cycle stock. An example may be a company who purchases coffee from a supplier. The coffee that is supplied is used every day; therefore the company may want to purchase a month’s worth of coffee that will satisfy their demand for roughly thirty days. To avoid any uncertainties in demand as well as shortages or delays, a safety stock can be purchased in addition. Although this scenario sounds ideal, situations do not always turn out to be perfect. One thing that can be a problem with supplying too much coffee to this company would be an issue of quality in the coffee. Keeping coffee stored away and unused for too long may cause the coffee to become stale and unsatisfying. In addition, a variety of associated costs and good customer service are a few challenges that may...
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