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Transcript of MANAGERIAL ACCOUNTING
Multinational hardware & electronics corporation
Dabble in computing products
Laptops, Netbooks, Desktops, Tablets
Warranty, servicing & repairing, replacing of parts.
"A situation in which a buyer does not want a product, and returns it to the company to get their money back."
Faulty laptop batteries
Monitor screen defects
Problems keep occurring thus a surge in product returns.
Facing complaints from consumers
Problems in quality which causes a surge in product returns
Certain machines have limited capacity
QUALITY CONTROL SYSTEM
"Quality control systems ensure products or services meet or exceed customer requirements. A proper and comprehensive quality control system is a key success factor in today’s demanding marketing place."
Covers all phase of the product life cycle (PLC)
Design, development, production, distribution, servicing and documentation.
Regulars on raw material quality, production plant procedures, inspection, management and service processes.
"JIT is a business strategy that strives to reduce the expenses cost by delivering the products on the right place, right time, right quality and quantity. "
With JIT, throughput by labour requirements where the focus is on eliminating setup times & mass inventories.
Applying TOC revenue, reduce cost & improve customer response time.
Achieving of best total system is to maximise throughput individually. Removing bottlenecks improves quality, enhancing TQM.
Concepts of JIT, TA & TQM complements one another, thus it is beneficial to the company's quality control system.
JUST IN TIME (JIT)
JUST IN TIME
THEORY OF CONSTRAINTS
Saving inventory storage costs
Less probability of perishable stock.
Obsolete or out of date goods
Usage of lesser time to place emphasis on the inventory
Avoid the built up of unsold finished product that occurs in sudden change of demand
The essential concept is that every organization must have at least one constraint
Any factor that limits the organization from getting more of whatever it strives for, which is usually profit.
The Goal focuses on constraints as bottleneck processes in a manufacturing organization.
An important performance measurement and decision making tool
Throughput measures the rate at which a business generates profits
Goal is to maximise throughput by determining the throughput return unit of bottleneck resource
"A chain is only as strong as its weakest link"
- Dr Eli Goldratt
Process 3 is the bottleneck
Faulty equipment = compromised quality = defective products
Not being utilised to its maximum
Maintenance and inspection of equipment needed
Cost incurred to prevent
production of low quality
Company Main Costs:
engineering of the production
process, inspection, rework,
transportation and warranty
repair costs as seen in Table 1.
Developed by Taiichi Ohno from Toyota
Visual signal or record to indicate the need to replenish before it experience shortage.
Costs are delayed until finished goods are done.
Receive order from retailers Order raw materials Manufacture the products when raw materials is delivered Finished goods and sold Revenue earn to pay the raw materials
Employees are held accountability for the products.
This will reduce human errors and increase the quality of the products.
Reduce defects High quality and reduce rework cost.
Strong and stable relationship
is crucial for JIT strategy to be executed.
COST OF QUALITY (COQ)
JUST IN TIME (JIT)
Increase inspection of machinery and production process
More costly to produce at bottleneck as direct material cost and throughput contribution forgone
Inspection of equipment = Increase in throughput
Good quality products transferred to bottleneck > Cost incurred from product returns