Cornerstone Exercise 15-1 Continuous Flow vs.

Departmental Flow Manufacturing

Cellular manufacturing groups process closely together, and this act effectively
eliminates wait and move times. For a given batch of units, total production
time is reduced with subsequent decreases in lead time and cost and improved
on-time delivery.

Requirement 1
Moving 830
Processing 75 41.5 mins*20
905

Requirement 2
First unit 45
Remaining Unit 285 (15 botles*19)
330
Saved time 905-330= 575 mins
Production rate 60/15= 4
Requirement 3
twelve minutes is the longest production time
So the rate is 60/12= 5 units per hour.

Cornerstone Exercise 15-2 Value Stream Costing

The unit cost of products in a value stream is the actual value-stream costs
divided by the number of units shipped for a given time period (usually a week).
If materials costs are significantly different for multiple products, the unit cost
is the average conversion cost plus the unit materials cost.

Requirement 1

Requirement 2
Requirement 3
Unit materials cost

Average unit conversion cost

Unit cost
Cornerstone Exercise 15-3 Profile Productivity Measurement
Profiles (vectors) of productivity measures can be compared over time to
assess productivity changes. If the changes are in the same direction, then
a definitive statement about productivity can be made. If a trade-off exists,
valuing the individual input productivity changes is needed to assess the
nature of the overall productivity change.
Requirement 1 2012 Partial Operational Productivity Ratios

Requirement 2 2013 Partial Operational Productivity Ratios

Requirement 3 Partial Operational Productivity Ratios

2012 2013

Cornerstone Exercise 15-4 Profit Linked Productivity Measurement <----------

The productivity effect on current-period profit is the difference in the cost of
the inputs that would have been used and the cost of the actual inputs used.
Price recovery is the difference between the actual profit change and the
profit-linked productivity change.

Requirement 1 "woulda"
Labor Materials
PQ 450000/5 90000 450000/.25 1800000
90000*14= 1260000 1800000*$3.50 6300000
Requirement 2
Labor Actual Materials
112500 hrs*14 1575000 1500000lbs*$3.50 5250000
 Labor Production Change Materials Production Chage
-315000 Unfavorable 1050000
Requirement 3
2012 2013 Change
10,800,000 9,900,000
8,640,000 6,825,000
2,160,000 3,075,000 915,000
Price
Recovery
componen 915,000-
t 735,000 180000
Extra Help 15.15
First thing
1) you need to do is the ratios
Productivity Profiles
20x1
Power 184320/23040 8
Material 184320/46080 4

20x2
Power 216000/10800 20
Material 216000/48600 4.44

Take this Year's output and divide by prio period product ratio
Output/ Prior Period Product Ratio x current cost

Input PQ PQ*P AQ AQ*P (PQxP)-(AQxP)

Power 27000 81000 10800 32400 48600
Materials 54000 810000 48600 729000 81000
891000 761400 162000

Notes 216,000/8= 27000

216000/4= 54000

Profit
Recovery
Componen
t Revenue- Cost of Inputs
20x1 [($8x 216000)-($3x10800)-(15x48600)] 966600

20x2 [($6x184320)-($2x 23040)-($16x 46080)] 322560

644040
Price Recovery
644040-129600
= 514440
TEST QUESTION Requirement 1
LPR 540000/1 5
MPR 540000/2 0.25

Requirement 2
LPR 450000/7 6
MPR 450000/1 0.3
Productivity increased for each input. The new Process have impr
productivty.

Requirement 3 20x1 20x2

Labor 5 4
Material 0.25 0.3
 Labor productivity has decreased. Material productivity has incre
Favorable 225.3333 exists and must be valued to assess the nature of the overall produ

Why did it increase? We changed the way we did production.

(PQxP)-(AQxP)
 (15 bottle*19)
The new Process have improved overall
erial productivity has increased. A trade off between the two inputs
nature of the overall productivity change.