The Unusual Mystery Into Research Paper Topics on Vikings Revealed

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Systems Essay Example for College Students - Free Essay Example

Executive Summary The companys profits are falling and there is a build-up of inventory within the production process. This report considers three management systems which could rectify the situation. Considering theory of constraints, just in time and programme evaluation and review technique, the report recommends that more information regarding the cause of the problems is undertaken, and a suitable programme of revaluation of the business processes is undertaken. Introduction The role of management accounting in the organisation has become so much more that the reporting of the score to managers (Hansen, Mouritsen 2006). In the wake of the decline of Western Manufacturing and the relevance crisis of management accounting to modern business as outlined by Kaplan and Johnson in ‘Relevance Lost, the traditional cost accounting approach has been largely replaced by alternative methodologies (Kee, Schmidt 2000). The role of the management accounting in the modern firm is not only to report the score, but to seek to influence the score by using techniques and theoretical approaches to improve the business processes. As such it is important for managers to understand the use and usefulness of a variety of alternatives to traditional accounting approaches, especially traditional cost accounting and look to introduce other techniques which may have practical advantages for the firm (Dugdale, Jones 1998). There is no one size fits all approach which w ill work in any case and the application of cost accounting can and will always provide key information about how the business is doing in terms of its goals. Indeed many of the newer techniques focus on particular applications within industry and each of them has something to offer the firm in terms of improving the business processes (Plenert 1993). This report considers three approaches in the context of practical application to a range of common problems, problems which may be responsible for the inventory build-up of the firm in question and its declining profits. The approaches are the Theory of Constraints (TOC) and the attendant logic of Throughput Accounting (TA), Just in Tim Inventory Management (JIT) and wider implications to ‘Lean manufacturing methodologies and the Program Evaluation and Review Technique framework (PERT). The report outlines the main features of these methodologies and the advantages and limitations of them with specific reference to their usefulness in a variety of practical situations. The report concludes that each of the methodologies has something to offer and that any management decision must be based on the goals and objectives of the company and its strategic direction. Theory of Constraints and Throughput Accounting Developed by E.M. Goldratt as a response to the criticisms of traditional cost accounting, the TOC states that the traditional variable costs of Cost Accounting do not apply, or rather, they apply with less rigour in a modern management situation (Bragg 2007). In the past Labour was seen as a totally variable cost, workers would work to the managements discretion and short time and layoffs were dictated by the level of production need. Goldratt argued that this was no longer the case as changes to society and legislation had meant that the workforce was more of a fixed cost for the organisation (Wei, Liu et al. 2002). The TOC states that even though modern managers are still evaluated by labour use, such efficiencies can lead to decisions which harm the organisation rather than help optimise production. This criticism led Goldratt to develop the TOC as an alternative system, identifying ‘constraint as a decision relevant concept in the service or production process (Wat son, Blackstone et al. 2007). The central idea to TOC and TA is that each organisation has a specific goal (or a set of specific goals) which can be effected by decision making, better decision making leads to better completion of the goals (Linhares 2009). If one takes the normative assumption of a profit orientated organisation as the maximisation of the owners wealth, then the ‘goal unit will be the ‘throughput contribution (TC) which is similar to the ‘total contribution marginal costing (Hansen, Mouritsen 2006). The difference in TA is that ‘throughput contribution is defined in the TOC as Sales (S), less total variable cost (TVC) which is he cost of raw materials (not labour). This is placed in the context of two further conceptual mechanisms, Investment (I), which refers to money tied up in the system in terms of inventory and work in progress, as well as with machinery and buildings and the like, the second is Operating Expense (OE) which is the money spent by the system on generating goal units, but not the cost of raw materials, so items such as utilities and wages (Davies, Mabin et al. 2005). This delineation of the costs of production and services allows the processes to be viewed in terms of a number of optimization questions. Typically firms need to ask themselves how throughput (TC) can be increased, how Investment (I) can be reduced and how Operating Expense (OE) can be reduced. These questions in turn will affect the Net Profit, Return on Investment, Productivity and Investment. Therefore it can be argued that the maximisation of throughput contribution is key to the maximisation of all of the above key performance indicators. The firm can seek to maximise TC by optimising a number of aspects of the production processes. There are five common steps associated with this process; Identify the system constraints Exploit the system constraints Subordinate everything else to the decisions made Elevate the systems constraints Restart the process if a constraint has been broken The following example illustrates the process. Company A has two workers and produces two products (Workers, A,B, Products X Y). Product Y Requires ten minutes of Worker As time, and product X requires fifteen minutes. Potential demand for X is 100 units, for Y is 50 units. If the total time available to worker A is 2000 minutes per week Worker A is not a constraint as the total time to manufacture both products is equal to the total available time (15 minutes x 100, 10 minutes x 50 = 2000 minutes). Worker B also works on the two products but takes 15 minutes on both products (15 minutes x 100, 15 minutes x 50 = 2250), assuming that Worker B has the same maximum time available (2000 minutes) there is a constraint around Worker B. Thus the constraint has been identified. Step two seeks to exploit the constraint. Concentrating on Worker B as this is where the constraint occur, the exploitation of the constraint means the company (according to its goal of maximising wealth ) needs to make a decision based on how to allocate production. To do this the managers need to know what the Throughput Contribution is for each unit. Assume that TC for product X is  £75 per unit and for product Y it is  £120 per unit. The constraint here is time, measured in units of a minute, therefore the TC per unit of constraint is found by dividing the TC by the time taken with each worker, at the point of constraint this is as follows (X, 75/15 =  £5, Y, 120/15 =  £8.33), as there are only 2000 minutes available the TOC suggests that all 50 units of product Y should be produced with a total time taken of (50 x 15 = 750, TC =  £8.33 x 750 =  £6247.5) leaving 1250 minutes to produce product X (TC 1250 x  £5 =  £6250). Net profit will therefore be (6247.5 + 6250 =  £12497.5). In this example this is how the TOC makes all other considerations subordinate to this decision. TOC does have its problems, it makes many of the normative assumptions about the behaviour of costs that traditional cost accounting does, and largely ignores costs of changing the activities of many of the business processes to suit a particular set of circumstances (Rand 2000). Yet it is a powerful decision making tool and one which, if used properly can alter the success of a manufacturing process in terms of the goal of maximising the wealth of the company . Just In Time (JIT) JIT Inventory Management is one of a set of ‘Lean manufacturing methodologies which has grown out of the Japanese Approach to management accounting (Abdul-Nour, Lambert et al. 1998). In particular much of modern JIT management is based on the Kanban system of Inventory management which is a part of the Toyota Production System (TPS) which is famous the world over for its efficiency and speed to market with new products (Houghton, Portougal 1997). JIT as a part of a Lean system relies upon the pull of the market rather than the push of production targets and generally states that investment in inventory, both in terms of raw materials and work in progress, also finished goods, represents a waste to the company (White, Prybutok 2001). JIT requires the accurate organisation of the production process in terms of both processes and components of production and finds a minimum level of stock holding at every level of the process. The original Kanban system was based around a set of two cards which accompanied an individual component through the production process. At each point where a component was removed from stock to be used in a process of manufacturing one of the cards would be returned to the previous process to alert that process that another was required. This meant that without the aid of sophisticated computers the TPS managed to cut its value of stock in the factory to a fraction of what it had been, requiring less investment of working capital, lower overheads in terms of storage and warehousing, and less risk of over production of any components or of finished goods (Abdul-Nour, Lambert et al. 1998). JIT is a system which has largely been adopted in many of the larger production facilities which have adopted ‘Lean technology. These range from most car manufacturers to manufacturers of high technology. But there is growing evidence that it may be very useful in terms of the smaller manufacturer, and even the service industry, especially as the cost of raw materials is rising in the face of increased demand for core materials (Abdul-Nour, Lambert et al. 1998, Khan, Sarker 2002). JIT is difficult to implement and requires considerable investment in the production processes (Hansen, Mouritsen 2006, Houghton, Portougal 1997). It is impossible to implement JIT unless there has been a programme of business process redesign to allow such minimum stock levels to be held, and this can present a large investment cost in the firm which may or may not ultimately benefit from such an inventory management programme. JIT requires the firm to invest heavily in partnerships with suppliers as well and to evaluate the supply chain from almost every angle to prevent a total collapse of the production system (David, Eben-Chaime 2003). This is because there is little room for error in the process, if demand is poorly predicted and is higher than expected then the firm will run out of the raw materials of production and may lose custom (Kelle, Al-khateeb et al. 2003). If lower than predicted the firm will not have the capacity to store inventory (die to process redesign). Further if suppliers fail to deliver for any reason the process will come to an abrupt halt. JIT therefore requires a significant amount of managerial information from both the external market and the internal processes to get right and there have been many cases of difficult implementation, especially in smaller companies (Abdul-Nour, Lambert et al. 1998). Notwithstanding this there is a lot of evidence that with more and sophisticated modelling techniques from increasingly advanced technology, JIT systems are getting easier to implement (White, Prybutok 2001, Yasin, Small et al. 1997). Therefore as long as the systems are set up correctly there are major advantages in reducing the waste of inventory throughout the process of manufacturing. Because of its requirements, and making everything subordinate to the level o f inventory, it is not applicable for JIT systems to be used in conjunction with the Theory of Constraints, as managers are unable to subordinate all decisions within the production process to a ‘bottleneck. Therefore some would argue that JIT systems are less flexible, or certainly allow less flexibility that TOC does (Yasin, Small et al. 1997). Programme Evaluation and Review Technique (PERT) Put simply a PERT map is a model of complex processes which occur to facilitate an outcome (Castro, Gà ³mez et al. 2008). The PERT framework is very similar and often used in conjunction with a critical pathway diagram which shows the key processes involved in such an outcome (Mummolo 1997). PERT modelling makes a number of assumptions and has many conventions. In drafting a PERT chart the processes will be numbered in tens, to allow for further additions as the model grows. Further the model assumes that there is a linear relationship between the processes and therefore a number of key relationships (critical pathways) are determined (Cox 1995). These are often termed predecessor events and successor events. The PERT model deals with time in a number of ways giving an optimistic time and a pessimistic time for the completion of a process. It allows managers to view a project, task or process in a way which will help to maximise the efficiency of such a task in terms of a nu mber of variables (Shipley, de Korvin et al. 1997). Implementation of PERT requires a significant investment of time and expertise and so can have an impact on the costs of an activity, which must be weighed with the advantages or benefits such analysis brings to the process redesign (Azaron, Katagiri et al. 2006). Often PERT is a useful way to implement ‘Lean techniques of production as it allows the mapping of existing processes to look for ‘slack in the system. But its complexity can also be a disadvantage in terms of the time it takes to complete and the risk of errors in the model having unintended consequences to any new or redesigned process (Azaron, Katagiri et al. 2006). PERT is most useful at outlining the dependencies of a process and the identification of the critical pathways which affect the outcomes of a process. Further the methodology allows for the identification of the benefits of early, late and slack starts or a process (Cox 1995). It is a lso a way of organising a large and complex amount of information I a way which is relatively easy to understand by non-specialist managers, and as such allows the input of many areas of speciality in the redesign process, some of which may not be heard in terms of purely operations or accounting systems such as JIT and TOC. Yet PERT can have a number of significant disadvantages when used. First and foremost is the possibility of thousands of critical and interrelated aspect of a singly process (Mummolo 1997). The time taken to map out all of them can be considerable and even if they are all mapped out the subtle interrelationships are often difficult to place into such a restrictive framework. It is a given that in real life the process will not always work in the way in which it is modelled, and small changes across a few key aspects can vastly change the outcomes and behaviours of many of the assumptions behind PERT analysis. PERT is very useful in terms of initial inv estigation of a process or event, but it takes both art and science to appreciate how something will work in the real world situations of manufacturing or service industries. In this respect PERT should be seen only as an aid to understanding and not a ‘right answer (Castro, Gà ³mez et al. 2008). Conclusions The three managerial tools which have been outlined in this report are all powerful providers of decision relevant information. Further all three allow the management to view not only the outcomes at the current time, but also to make significant changes to the processes of production or provision of services which can dramatically improve performance. The case given points to both poor profits and returns on investment and poor inventory management as problems for the company, as such it is important before any decisions are made about the implementation of new management practices, as to why these are occurring. If the drop in profits are due to a slackening of demand, a change to JIT and the attendant redesign of the business along ‘Lean philosophy may be significantly advantageous, as it will allow tight control over inventory and allow the company to respond to the needs of the market more effectively. By removing overproduction and inventory as wastes to the busin ess, profits would be expected to recover, as long as the business is still a going concern (Hansen, Mouritsen 2006). If, however, the company still has similar levels of demand for its products then the company will need to investigate where the problems in the existing processes are. TOC would be one way of looking at this problem, so too would JIT. It is felt if the levels of demand are broadly similar it may well be worth the management of the company undertaking some analysis of the business processes with a view to coming to a decision about the suitability of either TOC or JIT, but it must be appreciated that each of these approaches carry some significant costs and risk if the analysis is not well thought out. PERT analysis will map out the internal process and identify the various problems with slack and time, but it does not look in much detail at costs. Other methodologies the company may like to consider as a part of any process redesign are the Activity Based a pproaches to costing, management and budgeting, these fit well with JIT management, but not so well with TOC. TOC has significant limitations because it subordinates everything to the constraint, and as new constraints appear the process has to be restarted from scratch. This criticism also gives it the flexibility that the other systems mentioned herein do not possess. This report recommends that managers identify the reason for the falling profits, and look to find out why inventory is building up (are these a symptom of slack demand, or of inefficiencies within the business). Based on these findings a decision as to what further systems are needed can be made. References Abdul-Nour, G., Lambert, S. and Drolet, J., 1998. Adaptation of jit phylosophy and kanban technique to a small-sized manufacturing firm; a project management approach. Computers Industrial Engineering, 35(3-4), pp. 419-422. Azaron, A., Katagiri, H., Sakawa, M., Kato, K. and Memarianai, A., 2006. A multi-objective resource allocation problem in PERT networks. European Journal of Operational Research, 172(3), pp. 838-854. Bragg, S.M., 2007. Throughput accounting: a guide to constraint management. Wiley. Castro, J., Gomez, D. and Tejada, J., 2008. A rule for slack allocation proportional to the duration in a PERT network. European Journal of Operational Research, 187(2), pp. 556-570. Cox, M., 1995. Simple normal approximation to the completion time distribution for a PERT network. International Journal of Project Management, 13(4), pp. 265-270. David, I. and Eben-Chaime, M., 2003. How far should JIT vendor–buyer relationships go? International Journal of Pro duction Economics, 81-82, pp. 361-368. Davies, J., Mabin, V.J. and Balderstone, S.J., 2005. The theory of constraints: a methodology apart?—a comparison with selected OR/MS methodologies. Omega, 33(6), pp. 506-524. Dugdale, D. and Jones, T.C., 1998. Throughout Accounting: Transforming Practices?, The British Accounting Review, 30(3), pp. 203-220. Hansen, A. and Mouritsen, J., 2006. Management Accounting and Operations Management: Understanding the Challenges from Integrated Manufacturing. In: Christopher S. Chapman, Anthony G. Hopwood and Michael D.Sheilds, ed, Handbooks of Management Accounting Research. Elsevier, pp. 729-752. Houghton, E. and Portougal, V., 1997. Trade-offs in JIT production planning for multi-stage systems: balancing work-load variations and WIP inventories. International Transactions in Operational Research, 4(5-6), pp. 315-326. Kee, R. and Schmidt, C., 2000. A comparative analysis of utilizing activity-based costing and the theory of c onstraints for making product-mix decisions. International Journal of Production Economics, 63(1), pp. 1-17. Kelle, P., Al-Khateeb, F. and Anders Miller, P., 2003. Partnership and negotiation support by joint optimal ordering/setup policies for JIT. International Journal of Production Economics, 81-82, pp. 431-441. Khan, L.R. and Sarker, R.A., 2002. An optimal batch size for a JIT manufacturing system. Computers Industrial Engineering, 42(2-4), pp. 127-136. Linhares, A., 2009. Theory of constraints and the combinatorial complexity of the product-mix decision. International Journal of Production Economics, 121(1), pp. 121-129. Mummolo, G., 1997. Measuring uncertainty and criticality in network planning by PERT-path technique. International Journal of Project Management, 15(6), pp. 377-387. Plenert, G., 1993. Optimizing theory of constraints when multiple constrained resources exist. European Journal of Operational Research, 70(1), pp. 126-133. Rand, G.K., 2000 . Critical chain: the theory of constraints applied to project management. International Journal of Project Management, 18(3), pp. 173-177. Shipley, M.F., De Korvin, A. and Omer, K., 1997. Bifpet methodology versus PERT in project management: fuzzy probability instead of the beta distribution. Journal of Engineering and Technology Management, 14(1), pp. 49-65. Watson, K.J., Blackstone, J.H. and Gardiner, S.C., 2007. The evolution of a management philosophy: The theory of constraints. Journal of Operations Management, 25(2), pp. 387-402. Wei, C., Liu, P. and Tsai, Y., 2002. Resource-constrained project management using enhanced theory of constraint. International Journal of Project Management, 20(7), pp. 561-567. White, R.E. and Prybutok, V., 2001. The relationship between JIT practices and type of production system. Omega, 29(2), pp. 113-124. Yasin, M.M., Small, M. and WAFA, M.A., 1997. An empirical investigation of JIT effectiveness: an organizational perspective. Omega, 25(4), pp. 461-471.

The Importance of Term Paper Guidelines

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Tips For Creating Your Personal Journal Essay

Tips For Creating Your Personal Journal EssayThe most important part of this article is that journal writing samples for a person essay is not necessarily for people with literary talent. Many writers have had the experience of knowing that they did not do well in their attempts to write a book. Writing a book is similar to writing a journal essay, it takes practice and research. However, there are a few things you should know about journal writing samples for a person essay.The first tip to remember is that the journal written piece must be able to be read by an audience. This means that it should be able to stand on its own and speak to the reader. If it is filled with a lot of art or that is filled with flowery language then it will be difficult to get across the message. So the next tip is to make sure that the writing sample is able to stand on its own and speak the meaning that you want to convey.Another tip to remember is that if you want to make your journal writing samples f or a person essay stand out you should use images or photographs to represent the text. This will make the text even more meaningful. When the image is easily accessible, the reader will feel as though they are actually reading a story. This will give the impression that the writer is present and that there is no limitation of space.There are many different styles of writing that can be used in a journal written piece. Some people tend to write in a casual way and others prefer to be formal. The difference between these two styles can make all the difference in the world when it comes to the appearance of the journal essay.One of the benefits of writing a journal essay is that it is easy to read and the messages conveyed by the piece are easy to understand and digest. Therefore it is important that the writing sample includes a good sentence structure that is understandable.When it comes to writing a personal journal article, it is important that you choose the right words. That is because it can make all the difference in the world when the essay is read. A badly written sentence will certainly affect the reader. This is why it is important that you get the grammar right when you are trying to create your personal journal article.As mentioned above, when you are creating a personal journal article it is very important that you get the grammar right. If you don't then the person writing the essay will be able to see through the writing samples for a person essay and won't be able to read the essay.