Chapter 2

• Is a production system also known as 'pull-it-through approach'


  Just-in-time (JIT)
• Is the philosophy that activities are undertaken only as needed or demanded.Inventories are reduced to the minimum and/or zero.

  Just-in-time (JIT)
• What are the four characteristics of JIT?

  1. Elimination of activities that do not add value

  2. Commitment to a high level of quality

  3. Commitment to continues improvement

  4. Emphasis on simplifications and increased visibility
• What are the main benefits of JIT?

  1. Working capital position is improved

  2. Throughput time is reduced

  3. Areas previously use to store inventories are released

  4. Lesser waste and more customers satisfaction
• Is a technique in which management develop policies and practices to ensure that firm's products and services exceeds customers satisfaction.

  Total Quality Management (TQM)
• continues quality improvement program'

  Total Quality Management (TQM)
• Is a formal effort to improve quality throughout organization's value chain

  Total Quality Management (TQM)
• Two major characteristics of TQM

  1. Focus on serving customers

  2. Systematic problem-solving made-up front-line workers
• Is an approach where a business process is diagrammed in detail, questioned and completely redesigned in order to eliminate unnecessary steps, errors and reduce costs.

  Process Reengineering
• process of creating competitive advantage

  Reengineering
• fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.

  Reengineering
• any series of steps that are followed in order to carry out tasks in a business.

  Business Process
• Steps of Process Reengineering

  1. Diagrammed in detail

  2. Every steps must be analyze and justified

  3. The process is redesigned
• Anticipated results of steps for Process Reengineering

  1. Process is simplified and completed in less time

  2. Costs and opportunity for errors is reduced
• a process by which a firm:• determine its critical success factors• studies best practices of other firms achieving theirs success factors• implements improvements

  Benchmarking
• Is management technique in which marketing and production process is designed to handle increased variety that results from delivering products and services to customers.

  Mass Customization
• Four Areas of Critical Success Factor in Balance Scorecard Accounting

  1. Financial Performance

  2. Customer satisfaction

  3. Internal business process

  4. Innovation and learning
• Design of Management Accounting System

  1. Customer focus theme

  2. Value Chain and supply chain analysis
• Two general strategies for Customer focus theme

  Cost Leadership Superior product through differentiation
• “ Information and Communication Technology Management“ Cost Management System
• Is used to develop a detailed description of the specific activities performed in the operation of the firm.Provides the basis for activity-based management

  Activity analysis
• Activity-based Costing (ABC)Is used to improve the accuracy of cost analysis by improving the tracing of costs to products or to individual customers


  Activity-based Costing (ABC)
• Uses activity analysis to improve operational control and management control

  Activity-based Management (ABM)
• Is a sequential process of identifying and removing constraints in a system

  Theory of Constraints (TOC)
• Emphasizes the importance of managing the organization's constraints or barriers or empede progress toward an objective

  Theory of Constraints (TOC)
• Basic sequential steps followed in applying TOC:

  1. Analyze all factors of production

  2. Identify weakest link” constraints

  3. Focus improvements efforts strengthen weakest

  4. If improvements effort successful, weakest link will improve to the point where it is no longer the weakest link

  5. A new weakest link (new constraints) must be identified
• Is a management technique to identify and monitor the costs of product throughout the cycle

  Life Cycle Costing
• It consists the all steps from product design and purchase of raw materials to delivery and service of finished products

  Life Cycle Costing
• Steps of Life Cycle Costing

  1. Research and development

  2. Product design (e.g prototyping, target costing and testing)

  3. Manufacturing, inspecting, packing and warehousing

  4. Marketing, promotion and distribution

  5. Sales and service
• TRUE OR FALSE: Management Accountants should strategically manage the product's full life cycle of costs including upstream and downstream costs as well as manufacturing costs.

  TRUE
• Involves the determination of the desired cost for a product

  Target Costing
• Statement

  1. Target Cost-Management accounting -Desired profit Statement

  2. Target Cost-Management determined price-Desired profit

  STATEMENT 1
• Used to respond to changing consumer tastes quickly

  Customer-aided Design and Manufacturing
• Use of computers in product development, analysis, and design modification to improve the quality and performance of the product

  Customer-aided Design (CAD)
• Use of computers to plan, implement, and control production

  Customer-aided Manufacturing (CAM)
• involves and requires a relatively large investment in computers, computer programming, machines and equipment

  Automation
• Two integration approaches of Automation

  1. Flexible manufacturing system (FMS)

  2. Computer-integrated Manufacturing (CIM)
• is a manufacturing system that totally integrates all office and factory functions within a company via a computer-based information network to allow hour-by-hour manufacturing management

  Computer-intergrated Manufacturing (CIM)
• Is a computerized network of automated equipment that produces one or more groups of parts or variations of a product in a flexible manner.Uses robots and computer-controlled materials handling

  Flexible manufacturing system (FMS)
• Major characteristics of modern manufacturing companies adopting FMS and CIM are:

  production of high-quality products and services- low inventories- high degrees of automation- quick cycle time- increased flexibility- advance information technology