Chapter 13

Hoffman Company collected the following information regarding to products: Price: $600 (A) and $1200 (B) Materials Cost: $300 (A) and $750 (B) Machine Minutes: 30 (A) and 60 (B) Assuming the machine minutes is he constraint, what is the throughput margin per minute for product B?

$7.50 ($1200-750)/60

The methods and techniques that help support the kaizen process include:

- Theory of constraints - Flexible manufacturing systems - Total quality management

Which of the follow statements regarding the sales life cycle are true?

- a differentiations strategy is usually followed in the early phases - firms become price takers rather than price settlers in the latter phases - prices tend to be high during the growth phase

Options for managing costs to reach the target level include:

- integrating new manufacturing technology - seeking higher productivity - redesigning products and services

Steps in the theory of constraints analysis include:

- redesign the manufacturing process the facility and fast cycle time - add capacity to a constraint

The target costing steps

1. Determine market price 2. Determine desired profit 3. Calculate the target cost 4. Use value engineering to identify ways to reduce product cost 5. Use kaizen costing and operational control to further reduce costs

Starting with the first step at the top, the four steps in quality function deployment (QFD) in order are:

1. Determine the customers' purchasing criteria and how each is ranked 2. Identity the components of the product and the cost of each component 3. Determine how each component contributes to customer satisfaction 4. Determine the importance index of each component

A company collecting the following information regarding customer criteria and ranking: Reliability - 60 importance Performance - 85 importance Cost - 45 importance The relative importance of Reliability is:

31.6% 60/ (60+85+45)

Activities that slow a product's total cycle time are called __________

Contraints

When using target costing, management must balance:

Costs, features, and quality

An effective distribution network and cost control are key to continued survival during the ____________ phase of the sales life cycle

Decline

When using target costing, the balancing of costs, features, and quality takes place primarily in the:

Design phase

The type of value engineering employed in firms with products that have a large number of features is _____________ analysis

Functional

Categorize each industry by the type of value engineering approach each is likely to use

Functional analysis: computer software, consumer electronics, and automobiles Design analysis: construction equipment and medical equipment

A method of identifying similarities in the part of products manufactured so the same part can be used in two or more products is ___________________

Group technology

Sales, product variety and competition increase rapidly during the ________ phase of the sales life cycle

Growth

When a company has reached a point when improved product designs are already in place the focus changes to continuous improvement efforts, which is called:

Kaizen

When a firm lowers prices with a goal of increasing market share, is a following a _______________ strategy

Penetration

Management focus & the sales life cycle phase

Phase 1: introduction - Design, differentiation and marketing Phase 2: Growth - New product development and pricing Phase 3: Maturity - Cost control, quality, service

Categorize Characteristic in Theory of Constraints (TOC) or Activity-based Costing (ABC)

TOC: explicitly considers capacity, optimizes production flow, and short-term focus ABC: supports strategic pricing, long-term focus, and develops an understanding of cost drivers

TRUE or FALSE: Target costing can both save time and increase time that must be spent in an organization

TRUE

Competitive price - desired profit is the _________________ formula

Target costing

A technique that optimizes production flow and short-term product mix is:

Theory of constraints

When performing a TOC analysis, product price - all materials cost - ___________________

Throughput margin

When a firm's pricing is based on meeting specific customer needs, the firm is using:

Value pricing

The type of value engineering used for industrial and specialized products is ___________________

design analysis

Little competition and relatively high costs and prices are components of the ______________ phase of the sales life cycle

introduction

The period between the receipt of a customer order and the shipment of that order is called manufacturing __________ time

lead