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Lean manufacturing
The following are some quotes provided by a number of managers at Hawkeye Machining Company regarding the company’s planned move toward a lean manufacturing system:
Director of Sales: I’m afraid we’ll miss some sales if we don’t keep a large stock of items on hand just in case demand increases. It only makes sense to me to keep large inventories in order to assure product availability for our customers.
Director of Purchasing: I’m very concerned about moving to a lean system for materials. What would happen if one of our suppliers were unable to make a shipment? A supplier could fall behind m production or have a quality problem. Without some safety stock in our materials, our whole plant would shut down.
Director of Manufacturing: If we go to lean manufacturing, I think our factory output will drop. We need in-process inventory in order to ‘smooth out the inevitable problems that occur during manufacturing For example, if a machine that is used to process a product breaks down, it would starve the next machine if I don’t have in-process inventory between the two machines. If I have in-process inventory, then I can keep the next operation busy while I fix the broken machine. Thus, the in-process inventories give me a safety valve that I can use to keep things running when things go wrong
How would you respond to these managers?
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Chapter 3 Solutions
Managerial Accounting, Loose-leaf Version
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Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning