Conversion Cycle Context-Level Data Flow Diagram-Continuous Processing Make-To-Order Processing - Batch Processing

Conversion Cycle- consists of both physical and information activities related to manufacturing
production for sale.
Context-level Data Flow Diagram- illustrates the central role of the conversion cycle and interactions
with other business cycle.
1. Continuous Processing- homogeneous products
2. Make-to-order Processing- fabricated products
3. Batch Processing- batch products, most common method of production.
Documents in Batch Processing System
1. Production Schedule- formal plan and authorization to begin the production, timetable
2. Bill of Materials- specifies type and quantity of materials
3. Route Sheet- shows production path
4. Work Order - draws from Bom and route sheets specify materials
5. Move Ticket- records work done in each work center
6. Materials Requisition - authorizes storekeeper to release materials
Batch Processing
1. Plan and control production
- material and operation requirements
-production scheduling- second activity of the planning and control function
"Master Schedule- coordinates production of many different batches.
-work centers and storekeeping- obtain materials from storekeeping in exchange for materials
requisition
2. Prepare Production Operation
3. Maintain inventory control
4. Prepare cost accounting
Cost Accounting Activities - record the financial effects of physical events.
Lead time- time between placing an order for inventory and it’s arrival
Economic Order Quantity Model- reduce total inventory costs
Additional inventories Safety Stock

Inventory controls
1. Transaction Authorization
2. Segregation of Duties
3. Supervison
4. Access Control
-direct access to assets
-indirect access to assets
*Prenumbered Documents
5. Accounting Records
6. Independent Verification
"World class"- defines the modern era of business
Lean Manufacturing - doing more with less, eliminating waste, and reducing production cycle time.
-direct opposition of traditional manufacturing.
Lean Production
-improved efficiency and effectiveness.
Toyota Production System based on JIT- Just-in-time production model.
1. Pull Processing- involved pulling products.
2. Perfect Quality- requires zero defects in RM, WIP and FG.
3. Waste Minimization- activities that do not add value and maximize the use of scarce resources.
4. Inventory Reduction- Hallmark of lean manufacturing firms is their success in inventory reduction.
*Inventories cost money
*Inventories camouflage production problems
*Willingness to maintain inventories can precipitate overproduction
5. Production flexibility- long machine set ups
5. Established suppliers relations- establish and operative relationship
6. Team attitude- each employee must be vigilant, include purchasing receiving manufacturing
Manufacturing Flexibility- consumerism
Automation- heart of the lean manufacturing philosophy
Traditional manufacturing - consists of range of different machines, great deal of set up time
Island of Technology- describes an environment in the modern automation exists in the form of islands.
*Computer Numerical Controlled(CNC)- machines that can perform multiple operations.
*Computer Integrated Manufacturing (CIM)- completely automated environment with objective of

eliminating non-value added activities.
*Automated Storage and Retrieval Systems (AS/RS)- computer controlled conveyor systems
*Robotics- manufacturing robots are programmed to perform specific actions.
*Computer-Aided Design (CAD)- design better, repetitive design tasks
"manufacturability*
*Computer-Aided Manufacturing (CAM)- assist manufacturing process, focus on shop floor.
Value Stream Mapping- nonessential activities do not and should be eliminated
Value Stream Map- graphically represent their business processes to identify aspects of it that are
wasteful and should be removed.
Deficiencies of standard accounting systems:
1. Inaccurate cost allocations
2. Promotes nonlean behavior
3. Time lag
4. Financial orientation
Activity-Based Costing- method of allocating costs to products and services
*Activities - described the work performed in a firm
*Cost Objects- reasons for performing activities
*Activity driver- measures the activity consumption by cost object.

Value Stream Accounting- captures costs by value Stream rather than activity, includes all costs
associated with product family but makes no distinction.
*Product family- essential aspect in implementing value stream accounting
Materials Requirements Planning (MRP)- limited in focus and geared toward determining how much
raw materials are required, support inventory management.
Materials Requirements Planning II (MRP II)-
evolved from MRP, integrates product manufacturing etc.
Enterprise Resource Planning System (ERP) takes MRP II a step further by integrating all business
functions into core set of applications, compost of modules reflects industry best practices.
Electronic Data Interchange- communication links

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Conversion Cycle- consists of both physical and information activities related to manufacturing

production for sale.

1. Continuous Processing- homogeneous products

2. Make-to-order Processing- fabricated products

3. Batch Processing- batch products, most common method of production.

Documents in Batch Processing System

2. Bill of Materials- specifies type and quantity of materials

3. Route Sheet- shows production path

5. Move Ticket- records work done in each work center

6. Materials Requisition - authorizes storekeeper to release materials

1. Plan and control production

- material and operation requirements

-production scheduling- second activity of the planning and control function

"Master Schedule- coordinates production of many different batches.

2. Prepare Production Operation

3. Maintain inventory control

4. Prepare cost accounting

Cost Accounting Activities - record the financial effects of physical events.

Economic Order Quantity Model- reduce total inventory costs

Additional inventories Safety Stock

-direct access to assets

-indirect access to assets

"World class"- defines the modern era of business

-direct opposition of traditional manufacturing.

-improved efficiency and effectiveness.

Toyota Production System based on JIT- Just-in-time production model.

1. Pull Processing- involved pulling products.

2. Perfect Quality- requires zero defects in RM, WIP and FG.

*Inventories cost money

*Inventories camouflage production problems

*Willingness to maintain inventories can precipitate overproduction

5. Production flexibility- long machine set ups

5. Established suppliers relations- establish and operative relationship

Automation- heart of the lean manufacturing philosophy

*Computer Numerical Controlled(CNC)- machines that can perform multiple operations.

*Computer Integrated Manufacturing (CIM)- completely automated environment with objective of

*Robotics- manufacturing robots are programmed to perform specific actions.

*Computer-Aided Design (CAD)- design better, repetitive design tasks

*Computer-Aided Manufacturing (CAM)- assist manufacturing process, focus on shop floor.

Value Stream Mapping- nonessential activities do not and should be eliminated

Deficiencies of standard accounting systems:

1. Inaccurate cost allocations

2. Promotes nonlean behavior

Activity-Based Costing- method of allocating costs to products and services

*Activities - described the work performed in a firm

*Cost Objects- reasons for performing activities

*Activity driver- measures the activity consumption by cost object.

*Product family- essential aspect in implementing value stream accounting

Materials Requirements Planning II (MRP II)-

evolved from MRP, integrates product manufacturing etc.

Electronic Data Interchange- communication links

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