Income statement - Part 2
The following set of numbers represents my net operating cash flow: IQ -$339,925, Q -$108,188 Q -$42,128, Q $197,078. Based on my pro-formula cash flow which were for IQ -$339,925, Q – $108,792 Q -$109,915, Q $539,469, and going back and understanding the concept of pro-rata formula and budgets, I was not successful in implementation of these concepts. The reason being is that my projections in comparison of my results, I was if by $342,391. The first three quarters it appears that my decisions were successful as my results were beating my projections, but by making the decision to “throw all my chips in” I did not apply any decision making strategy, which proved to hurt my results.
I definitely think that if I were to complete the simulation again I would be able to apply pro-formula statements and budgets successfully, with knowledge, throughout all four quarters. In successfully applying the pro-formula concept; I would have been able to take my numbers end from the previous quarter, such as inventory, accounts receivable, and fixed assets, and used my computer based so, I could make any necessary adjustments, like reduce my manufacturing costs or increase production and marketing costs to have a better bottom line at the end of that quarter. This process would have allowed me to make logical and intentional decisions had I fully understood the concept during the simulation. 2. A.
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The Just in Time approach was designed and first implements by the Toyota manufacturing company in Japan. It’s entire purpose and concept is to optimize the production process while eliminating waste. Waste is considered to be things such as, but not limited to; cost of inventory, defective items, and the time an employee sends waiting for equipment or supplies to come in (Roy, 2005, p. 160-161). The following are the results for each quarter in regards to my ending inventory; IQ O Q 23 Q 113 Q 0. The fact that my ending inventory increased each quarter shows that I really wasn’t quite sure what I was doing, but after reviewing the lessons, I realize that my increase in ending inventory ended up costing the company money.
The way that I could have implemented the Just in Time approach, is to better understand what the actual demand for my product was and then to adjust my production levels based on the actual sales of the previous quarter. If I were able to implement the approach, I would have been able to set my base production level lower than what my projections were incase sales dropped, but then if I were to seeing sales pick up, I could increase my production and order supplies as necessary. This would greatly increase my operational efficiency as it would reduce my ending inventory and only be ordering and using the supplies needed, thus reducing the cost and time to the customer and increasing my profits and customer satisfaction. B.
Lean Operations being externally and have a more central focus on the customer, meaning that the process can be optimized by adjusting operations and processes based on a customer perspective (Higher, Render, 2011, p 636). Unfortunately due to my confusion during the simulation I did not apply the concept. If I had been able to apply the concepts though I would have developed a system that could have allowed me to better predict my customers’ wants rather than guessing as well as putting my clients’ needs first. The first way that I could have been successful is Just by simply choosing the correct target audience. In doing so, I could’ve saved a lot of time and money on marketing and focused those resources into activities that would further support and enhance my business.
Since the overall goal of lean operations is to remove all non-value add activities, if I were able to implement this strategy, I would have been much more successful as my cost would be lower as well as had higher sales results based on better customer satisfaction. All of this would in turn allow my business to be running closer to optimum operational efficiency. . Work cells allow a single product to be developed further in stage by a single machine/area and don’t require movement to a separate location to continue development. This is generally an automated process done so by machines, which the newer machines can be combined with older ones, therefore reducing the company’s need to replace expensive machinery more frequently. There is great benefit to this process as it eliminates the buildup of inventory at various parts to their next phase in completion.
Cost would also be reduced as work cells typically require fewer workers, thus reducing labor costs. In the simulation, since my product had so many different parts and assembly requirements, work cells would greatly benefit this type of industry as the individual parts can all be assembled in separate work cells and then brought together for final assembly. While initially my cost with straight line production are lower as it requires less training and less accountability of the employees, work cells would end up being cheaper in the long run. The simulation also did not account for employee happiness which work cells would have a direct effect on.
Due to employees being less engaged ND not being required to be accountable for the products quality in a straight line production, they would be unhappy with work and in turn be less productive. By implementing work cells, I would create a sense of pride and empowerment in the employees thus improving productivity as well as quality. I would also be able to hold the separate cells accountable for their finished products and praise where appropriate or reprimand when necessary. By using work cells, I would be completely content with paying a larger cost initially to increase productivity and quality in the Eng run; thus after a certain amount of time, work cells would actually be cheaper and save the company money and inevitably increase profits. 4.
As previously stated, my decisions during the simulation were not based on any definite rational as I became lost and confused rather quickly, but I am able to look back on the simulation and consider it more as a what-if and apply the safety stock concept in theory. In the simulation, since the company was a new business, safety stock would have been a very useful concept to utilize. At the beginning all of my projections were Just hat, projections, they were not founded on historical numbers. By apply the safety stock concept; I would have given myself the appropriate safety net to allow for my projections to align with the actual demand of the product without any interruption to manufacturing.
When reviewing my ending inventory for each quarter, I have come to the conclusion that I ended up with too much safety stock and incurred more carrying costs than were necessary. I could have decreased my production, thereby reducing my ending inventory, and lowering my carrying costs. 5. My preferred mutinous improvement program that I would have liked to implement in my company would be Six Sigma. I like this program as it provides a comprehensive, thorough investigation into all aspects of the company and focuses specifically on taking past errors and identifying how they could have been prevented. Particularly in the simulation the first area I would have evaluated and fixed would be management.
The company would have fared much better had I been in partnership with an individual who had a better knowledge base and understanding of how to run a company. By applying Six Sigma though, it allows the focus to be placed on one rear of the business at a time, and then while the next area is being evaluated, the previous one is able to begin implementing the recommendations, based on the finds that came out of its own evaluation.