MULTIPLE CHOICE
1. B
2. D
PROBLEMS
1. DOCUMENT FLOWCHART
See diagram below
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2. ECONOMIC ORDER QUANTITY
a. EOQ =
3. WORLD-CLASS COMPANIES
4. INTERNAL CONTROL
a. The work order is not sent to the cost accounting department to set up
a new WIP account. This can result in misallocation of costs to WIP. A
b. Work centers generate their own material requisitions, excess material
requirements, and material returns documents. The work centers
should not have both custody over raw materials and the
5. DESIGN AND DOCUMENT MANUFACTURING PROCESSES
Solutions to this problem will vary. The key elements of this central
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manufacturing system are would include:
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6. ZERO DEFECTS PROCESS
The advantages are that no defective units will be produced once a problem is
detected. Defective units are problematic and can cause recalls of the tractors at
great expense to Northern and damage to customer relationships. In the long run
the costs associated with shutting down the production line are more than off-set by
the cost savings from avoiding recalls and damage to the company’s reputation.
Achieving JIT requires more than simply the desire to do so. Challenges include:
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7. ACTIVITY DRIVERS
Overhead components for the company include executive salaries, legal
expenses, ordering costs, accounting and other support department costs, janitorial
services, electricity, plant, property and equipment costs, inventory handling
expenses, saw blades, scrap or waste disposal costs, glue, sand paper, mineral oil,
8. LEAN MANUFACTURING PRINCIPLES
Response: The essay should include the following points:
Pull processing. Products are pulled from the consumer end (demand), not
pushed from the production end (Supply). They are pulled into production as
Perfect quality. Success of the pull processing model requires zero defects
in raw material, work in process, and finished goods inventory. Poor quality is very
expensive to a firm. In the traditional manufacturing environment, these costs can
Waste minimization. All activities that do not add value and maximize the
use of scarce resources must be eliminated. The following are examples of waste in
traditional environments:
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Inventory reduction. The hallmark of lean manufacturing firms is their
success in inventory reduction. Lean firms have only a few days or sometimes even
a few hours of inventory on-hand. The three common problems outlined below
explain why inventory reduction is important.
1. Inventories cost money. They must be transported throughout the factory,
2. Inventories camouflage production problems. Bottlenecks and capacity
imbalances in the manufacturing process cause work-in-process inventory to
3. Willingness to maintain inventories can precipitate overproduction.
Because of setup cost constraints, firms tend to overproduce inventories in
Production flexibility. Long machine setup procedures cause delays in
production and encourage overproduction. Lean companies strive to reduce setup
Established Supplier relations. A lean manufacturing firm must have
Team Attitude. Lean manufacturing relies heavily on the team attitude of all
employees involved in the process. Each employee must be vigilant of problems that