MAC3703 EXAM PACK

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NOTE: IN MULTIPLE AND COMMON SENSE QUESTIONS YOU MAY BE ASKED ABOUT THE CHANGING BUSINESS ENVIRONMENT – THIS INCLUDES
IT ORIENTATED CHANGES THAT INFLUENCE GLOBAL TRADING ETC

QUESTIONS MAY ALSO REQUIRE YOU TO ADVISE THEREFORE COMMON KNOWLEDGE OF THE BUSINESS ENVIRONMENT IS CRITICALLY (NOT
NECESSARY TEXTBOOK BASED), YOU BASICALLY NEED AN OPINION DO UNDERSTANDING IS TESTED MORE.

THE CHANGING BUSINESS ENVIRONMENT

In the past there was minimum completion in some sectors, such as government owned monopolies, this meant
that there was no expectation of improvements in quality and efficiency.
Change in regulation introduced intense competition and increased the product range which required cost
management and management accounting information systems i.e:

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, JUST-IN-TIME SYSTEMS VS SYNCHRONOUS MANUFACTURING

THE OBJECTIVE IS TO PRODUCE PRODUCTS OR COMPONENTS AS AND WHEN REQUIRED BY THE CUSTOMER FOR USE RATHER THAN FOR STOCK

, * JIT USES A PULL SYSTEM – RESPONDS TO DEMAND *

• JIT PRODUCTION: A SYSTEM WHICH IS DRIVEN BY DEMAND FOR FINISHED PRODUCTS WHEREBY EACH COMPONENT ON A
PRODUCTION LINE IS PRODUCED ONLY WHEN NEEDED FOR THE NEXT STAGE
• JIT PURCHASING: A SYSTEM IN WHICH MATERIAL PURCHASES ARE CONTRACTED SO THAT THE RECEIPT AND USAGE OF THE
MATERIAL, TO THE MAXIMUM EXTENT POSSIBLE, COINCIDE.
• ELEMENTS OF JIT: JIT PURCHASING, CLOSE RELATIONSHIP WITH SUPPLIERS, UNIFORM LOADING, SET-UP TIME REDUCTION,
MACHINE CELLS, QUALITY, PULL SYSTEM, PREVENTATIVE MAINTENANCE, EMPLOYEE INVOLVEMENT
• VALUE ADD: NON-VALUE ADDED COSTS ARE ELIMINATED WITH JIT, VALUE ADDED COSTS ARE INCURRED FOR AN ACTIVITY
THAT CANNOT BE ELIMINATED WITHOUT THE CUSTOMERS PERCEIVING A DETERIORATION IN THE PERFORMANCE,
FUNCTION, OR OTHER QUALITY OF A PRODUCT
• PROBLEMS OF JIT: IT IS NOT ALWAYS EASY TO PREDICT PATTERNS OF DEMAND
 MAKES ORGANISATION VULNERABLE TO DISTRIBUTION IN THE SUPPLY CHAIN
 WIDE GEOGRAPHIC SPREAD OF STAKEHOLDERS MAKES JIT DIFFICULT
• MODERN VS TRADITIONAL INVENTORY CONTROLS: IN SOME INDUSTRIES SUCH AS HOSPITALS AND RESTAURANTS THE
TRADITIONAL APPROACH WOULD WORK BETTER THAN A JIT SYSTEM

STANDARD COSTING VS JIT: TRADITIONAL VARIANCE ANALYSIS IS ‘UNHELPFUL’ AND POTENTIALLY MISLEADING IN THE MODERN
ORGANISATION (EFFICIENCY AND MATERIAL VARIANCES PROVE THIS




SYNCHRONOUS MANUFACTURING REQUIRES MANAGERS TO FOCUS ON AREAS OF OPERATIONS WHICH OFFER THE GREATEST POSSIBILITIES FOR
GLOBAL IMPROVEMENTS

• IT IS A MANUFACTURING PHILOSOPHY WHICH AIMS TO ENSURE THAT ALL OPERATIONS WITHIN AN ORGANISATION ARE
PERFORMED FOR THE COMMON GOOD OF THE ORGANISATION AND THAT NOTHING IS DONE UNLESS IT IMPROVES THE
BOTTOM LINE (REGARDS JIT AS UNFOCUSED)
• ATTEMPTS TO DETECT PROBLEMS BEFORE THEY HAPPEN IN THE PRODUCTION PROCESS AND HENCE THROUGHPUT ARE
UNAFFECTED.
• AIMS TO DEVELOP A PRODUCTION SCHEDULE THAT TAKES ACCOUNT OF THE CONSTRAINTS WITHIN THE PROCESSING
SYSTEMS.


WOLD CLASS MANUFACTURING(WCM):

A WCM IS A MANUFACTURE OF HIGH-QUALITY PRODUCTS THAT REACH CUSTOMERSQUICKLY AT A LOW COST TO PROVIDE HIGH
PERFORMANCE AND CUSTOMER SATISFACTION

• A POSITION OF INTERNATIONAL MANUFACTURING EXCELLENCE, ACHIVED BY DEVELOPING A CULTURE BASED ON FACTORS
SUCH AS CONTINUOUS IMPROVEMENTS, PROBLEM PREVENTION, ZERO DEFECTS TOLERANCE, CUSTOMER-DRIVEN JIT-
BASED PRODUCTION AND TOTAL QUALITY MANAGEMENT.
• 4 KEY ELEMNTS OF WCM