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Question: What is Pareto inventory analysis? Why do


What is Pareto inventory analysis? Why do A items and C items warrant different inventory control methods? What are some methods that can be employed to control C items?
Companies making purchasing (rather than production) decisions often compute the economic order quantity (EOQ), which represents the least costly number of units to order. EOQ indicates the optimal balance between ordering and carrying costs by mathematically equating total ordering costs to total carrying costs. EOQ is a tool that is used in conjunction with traditional “push” production and inventory management systems. Because EOQ implies acquiring and holding inventory before it is needed, it is incompatible with “pull” systems such as JIT.
Purchasing managers should first determine which supplier can offer the appropriate quality of goods at the best price in the most reliable manner. After the supplier is selected, the most economical inventory quantity to order—at a single time—is determined. The EOQ formula is…..



> Rogal and Associates Legal Services hires full- and part time professional employees. Full-time experienced staff can be hired for a salary of $60,000 per year; fringe benefit costs for each full-time employee amount to 20 percent of base salary. Rogal a

> Sometimes a company, in its efforts to reduce costs, might also reduce quality. a. What kinds of costs could an organization reduce that would almost automatically lower product/service quality? b. If quality improvements create cost reductions, why woul

> Forsythe Furniture has gathered the following data on its quality costs for 2009 and 2010: a. Compute the percentage change in the two quality cost categories from 2009 to 2010. b. Write a brief explanation for the pattern of change in the two categorie

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> Hartigay Manufacturing is evaluating its quality control costs for 2010 and preparing the budget for 2011. Quality costs incurred at the company for 2010 are as follows: Prevention costs ………………………………………$ 450,000 Appraisal costs …………………………………………….150,000

> Koss Corp. makes high-quality headphones for a variety of applications. Koss is a Milwaukee-based company but has significant manufacturing operations in China. When manufacturing operations were moved to China, CEO Michael Koss was a strong proponent of

> For a benchmark, assume that the average firm incurs quality costs in the following proportions: Prevention ……………………………………..25% Appraisal ……………………………………….25% Internal failure ……………………………..25% External failure ……………………………..25% Total costs …………………………………..1

> Find The Benchmarking Exchange on the Internet. a. What are the five most actively benchmarked business processes of members of the exchange? b. Why do you think benchmarking processes related to managing human resources rank highly on the benchmarking i

> Your company is interested in developing information about quality but has a traditional accounting system that does not provide such information directly. In a three- or four-person team, prepare a set of recommendations about how to improve the company

> The following production information about quality costs has been gathered for June 2010: Total defective units ……………………………………………..580 Number of units reworked ……………………………………380 Number of units returned …………………………………….100 Total prevention cost …………………………

> Use the Internet to find four definitions of quality. a. Compare and contrast each of the four definitions with specific emphasis on whether the definition includes conformity or customer orientation. b. Assume that you are the manager of (1) a copy stor

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> By building quality into a process rather than having quality inspections at the end of the process, certain job functions (such as that of quality control inspector) can be eliminated. Additionally, the installation of automated equipment to monitor pro

> Johnson Consumer Electronics operates in an industry in which the demand for products is cyclical and often unpredictable. Discuss a strategy for dealing with uncertainty associated with the cycles that would be appropriate for Johnson Consumer Electroni

> Assume that you are in the market for a new car. Since your promotion at work, price is no object. You are considering purchasing a Porsche, but your spouse has suggested the purchase of a Kia. a. What do you perceive to be Porsche’s strategy relative to

> What is a quality audit? Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global environment, companies must recognize the need for, and be willing to initiate, compliance with a variet

> Assume that you are a management consultant who advises manufacturing firms regarding production technologies. One of the hot issues you often discuss with management is whether a pull system or a push system is superior in a particular situation. Consid

> Omaha Metal Products manufactures a variety of industrial products from stock metal components. The firm is engaged in its annual process of budgeting costs and revenues for the coming year. The cost of metal consumes approximately 50 percent of total re

> How can Pareto analysis help focus managerial efforts on reducing the costs of quality related problems?

> How is technology affecting supply-chain purchasing practices and transaction costs?

> In 2002, a green engineering case study about automobile emissions and saving energy was performed. The study generated designs for both gasoline- and diesel-powered automobiles with the following characteristics: a mid-size sedan that would get 52 miles

> What types of discretionary costs are subject to control as engineered costs? Provide several examples.

> Choose one product and one service with which you are well acquainted. Indicate how the product and service each meet (or do not meet) the eight overall quality characteristics. For the service, indicate how it meets (or does not meet) the three addition

> Go to the Web site for the Malcolm Baldrige National Quality Award and find the questionnaire titled “Are We Making Progress?”. a. Download the questionnaire and answer the questions relative to your place of employment or university. Ask four of your co

> Business process reengineering and downsizing often occur together. Why?

> In conducting activity analyses, the presence of certain activities indicates low production process quality. List five of these activities.

> How does the cost control system interact with the overall cost management system?

> Tyler Tubing’s management has been evaluating company policies with respect to control of costs of corrugated metal, one of the firm’s major component materials. The firm’s controller has gathered the following financial data, which may be pertinent to c

> How does the implementation of open-book management require an organization’s accountants to change their traditional practices?

> You have been assigned the task of projecting the cost of 2011 employee fringe benefits for your firm and have identified number of employees, total labor hours, and total labor cost as candidate independent variables for use in the estimation equation.

> Open-book management is a relatively new philosophy about the use of information in organizations. Describe open-book management and how it differs philosophically from the traditional view of the management of financial information in an organization

> New strategic alliances are formed every day. What are they, and why are they increasingly being used by businesses?

> What is an enterprise resource planning (ERP) system? How do ERP systems improve on prior generations of information systems?

> Besides increasing globalization, what trends within the United States are causing firms to seek more diversified workforces?

> How has the globalization of firms affected the diversity of their employees? Why has increased diversity put an additional burden on accounting systems?

> Describe “downsizing,” its causes, and its primary risks.

> Describe the three generic strategies for dealing with the environmental effects of operations. Is one of the strategies always preferred to the others? Discuss.

> What is business process reengineering? Does it lead to radical or modest changes in business practices? Discuss.

> IMeg manufactures various electronic assemblies that are sold primarily to computer manufacturers. IMeg’s reputation has been built on quality, timely delivery, and products that are consistently on the cutting edge of technology. IMeg’s typical product

> How would switching from a traditional manufacturing system to a flexible manufacturing system affect a firm’s inventory and production control systems?

> What changes must occur in a production environment to effectively implement JIT? Why are these changes necessary?

> You are employed by a firm engaging in heavy manufacturing. Its direct materials are sourced globally, but its non operating inputs are sourced from a variety of U.S. vendors. You have been charged with making a presentation to the CFO about the benefits

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> What is kaizen costing, and how does it differ from target costing?

> Why does the development stage have such a significant influence on a product’s profitability over its life cycle?

> What is target costing, and how is it useful in assessing a product’s total life cycle cost?

> How does a product’s life cycle stage influence production cost management?

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> Gale’s Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm’s more popular vegetables is a red onion, which has an annual sales quantity of approximately 30,000 pounds. T

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> What is the Malcolm Baldrige National Quality Award? Why would an organization apply for that award?

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> Compare and contrast the EFQM Excellence Model with the Malcolm Baldrige National Quality Award criteria. Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global environment, companies

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> Recent years have been characterized by high, and volatile, energy prices. Some critics of the energy industry suggest that the oil companies’ use of JIT inventory management has contributed to the volatility in prices and the supply constraints. Further

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> How does strategic cost management link information to corporate strategies?

> Why do firms hold cash balances? Why do some firms hold larger cash balances than other firms?

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> Assume that Honda Motor Co. Ltd. paid for a full page advertisement in The Wall Street Journal. The ad neither discussed any Honda products nor referred to year-end earnings or a new stock issuance. Instead, the ad informed readers that “buying quality p

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> What factors can cause costs to change? Which of these factors are subject to cost containment and which are not? What creates the difference in controllability?

> At what points in time is cost control for any specific organizational activity exercised? Why are these points of cost control important?

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> Borders and Amazon .com are competitors in vending books and other consumer items. The two are differentiated to an extent by their marketing strategies. Although Amazon.com relies exclusively on Internet marketing, Borders operates both retail stores an

> Find a company’s Web site that provides information on the characteristics that are desired for that company when establishing long-term/preferred supplier relationships. a. What characteristics are listed? Why do you think each of these is important? b.

> Dayna Moore, CEO of Layton Transmissions, sat dejected in her chair after reviewing the 2011 first-quarter financial reports on one of the company’s core products: a standard, five-speed transmission (product #2122) used in the heavy equipment industry i

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> Allridge University formed a new department to recruit top out-of-state students. The department’s funding for 2010 was $1,600,000, and the department was given the goal of recruiting 600 new nonresident students. By year-end 2010, the department was cre

> Most accounting professionals would agree that the accounting profession has developed effective tools for measuring and reporting events involving tangible assets. Most might also agree that the profession has miles to travel to report as effectively on

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> Horizon Resins has experienced serious problems as a result of attempts to manage its impacts on the environment. To illustrate the problems, consider the following events, which occurred during the past five years: • Horizon was assessed $75 million in

> In early 2007, Burger King, under pressure from animal rights activists including People for Ethical Treatment of Animals (PETA), announced it would start purchasing pork and eggs from suppliers that use cage-free animal management methods. In its announ

> Nanotechnology may be the future of manufacturing. The term refers to any area of research that deals with objects one-tenth the size of an atom. According to the Center for Responsible Nanotechnology and given the current rate of development, general-pu

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> Go to the Web site for the Malcolm Baldrige National Quality Award and find the answers to the following questions: a. When and why were the health and education categories established? b. How do the criteria for the health, education, and manufacturing

> Three possible goals for a business are to (1) maximize profits, (2) maximize shareholder wealth, and (3) satisfy customer wants and needs. If goal (1) or (2) is chosen, the primary measurements of “success” are organizational profitability or stock pric

> In 2008, pharmaceutical company Genentech withdrew its psoriasis drug Raptiva from the market because it was linked to a rare but often fatal brain disorder (progressive multifocal leukoencephalopathy) in patients who used the medication. There were abou

> Many companies are becoming ISO certified because of customer requests and because of the need to compete in the global marketplace. a. Why do you think customers are insisting that suppliers meet ISO 9001:2000 standards? b. Does meeting ISO 9001:2000 st

> Choose an organization with which you have a solid familiarity (this may even be your fraternity, sorority, or college). You have been placed in charge of initiating a quality culture in that organization. Access at least four Web sites that refer to thi

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> Assume that you are in charge of Physicians Social Service Agency, which provides counseling services to low-income families. The agency’s costs have been increasing with no corresponding increase in funding. In an effort to implement some cost reduction

> Laura Johnson, Technical Instruments Division manager of Worldwide Electronics, attended a 30-minute seminar on open book management recently. As a result of the seminar, she decided to implement some open-book management practices in her division. She b

> BreatheWell is very aware that its scuba diving tanks must be of the highest quality to maintain its reputation of excellence and safety. The company has retained you as a consultant and you have suggested that quantifying the costs would be important to

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