That is includes all the cost in warehouse management such as rental, employees’ salaries and utilities, and also opportunity and inventory cost in financial cost which is related to perishability, shrinkage and insurance. Oppositeness, the storage space cost which provided by third party logistics provider area allocated as inventory carrying cost because this cost are usually are charged based on the quantity of the goods. Holding cost Holding cost is the costs that are related with storing inventories that have not sale yet. This cost is one of the element costs of total inventory, with ordering cost and shortage cost. Moreover, damaged or rejected goods, storage space cost are also classified as holding cost.
However, when looked at the angle of the retailers, it is apparent that the company has strong buyer power. Supplier Power There is a huge level of dependence between Proctor and Gamble and its suppliers. In order to improve its revenues, the company needs high quality raw materials for its production activities. The fact that the company has a wide network of suppliers presents it with an opportunity to improve its operations. Threat of new entrants Over the years, P&G has dominated the consumer goods industry in the world.
The problem is, in Dynacorp, not only the amount of employees had significantly increased but the product scope had expanded as well. With thousands of employees working together under the same environment and several product lines on the market, at this point, with three divisions working toward different goals based on its own specific fields, Dynacorp had actually developed a boundary among the divisions. And this separation was deepened as the company expanded bigger. “Dynacorp’s current organization had serious shortcomings” (page1). The lack of integration between divisions is a result from the fact that the organizational structure did not meet the company’s expectation.
Towne argued, “… to a special committee, by whom it can be carefully considered, and by whom, if it seems expedient to proceed further, the whole matter can be matured and formulated in an orderly manner…” (p. 52). Where does the power of decision-making rest according to this reading in an organization? The power of decision-making lies on the individual knowledge of the general principles of management such as the division of work, subordination, order and equity that a manager will eventually place during the industrial operations. The decision-making of the upper level managers and committees will help them to strengthen or weaken the operations and management of staff members or employees. Compare and contrast in three sentences from the reading to the tenets that are fundamental to the Classical School of Thought.
These aspects will be followed by several constraints that should be satisfied in order to fulfill the real condition inside the industry. The constraints can be defined as capacity for each plant, capacity for each type of transportation mode, capacity for ship loader and unloader, working hours/ day, inventory cost, shortage cost, penalty cost for exceeding the congestion allowance, etc. By considering the constraints, the company should achieve the objectives by completing the needs of subsidiary fertilizer corresponding to government rules, optimizing the plant utilization, and also optimizing the company profitability. II. METHODOLOGY Problem that will be discuss in this research solved by distribution requirements planning method (DRP).
1. What is the LCM Rule for Inventory? Explain with suitable examples. LCM Rule i.e Lower of cost or market value is a rule which is applied and followed by the firm’s accountant while recording value of inventory in the financial statements. Basically firm records all of its assets in the financial statements at their original cost (cost which is initially incurred to acquire these assets), but this is not an established rule for recording inventory, and hence at the time of recognizing and valuing inventory in the financial statements, cost principle , which businesses follow for entirely all of their asset is not recognized for inventory.
Differences between Job Order Costing and Process Costing Fundamentally, the two polar extremes of product costing are usually labeled job-order costing and process costing. Product costing is an averaging technique. The unit cost used for inventory purposes is the result of dividing some accumulated cost by some measure of production. The basic distinction between job-order costing and process costing is the breadth of the denominator: in job-order costing, it is small; but in process costing it is large. (Horngren, C, 1967).
Job Order Costing “Costing is an accounting technique used to determine the exact expenses for materials, labor and overhead incurred in operations” (D. Ingram). Job order cost method is a method of costing used when the products are made based on specific customer orders. Job order costing records the actual materials and labor expenses for specific jobs, and assigns overhead to jobs at a pre-determined rate. Different costing methods have each their own strength and weaknesses that make them best suited for a vast array of situations. In the Job Order Costing method every product manufactured is considered it’s own unique job.
Investment in information technology has resulted in significant effect on productive levels, growth and also the value of business organization. There are also other works which have proved that there are also positive results on internal performance such as inventory turnover. All these researches suggests that there are positive benefits from the implementation of IT systems with successful ERP deployment, many little have pointed out the statistical models and reports that favors the advantages. Over the last few decades, companies have paid a considerable attention to the methods of Manufacturing Planning and Control Systems (MPCS). Management responsibilities concerning the concept of MPCS
Purchasing often includes receiving and payment as well. Within the overarching Procure-To-Pay Cycle, the steps specifically related to purchasing are:1) Purchase Order Acknowledgement, 2) Advance Shipment Notice, 3)Goods Receipt 4) Invoice Recording, 5) 3 Way Match 6) Payment to Supplier . Unlike the entire Procure-To-Pay Cycle, the steps explicitly related to purchasing should not be tailored to suit the size and scope of each individual business. These are fundamental steps of good purchasing and should be employed routinely as a best practice in all businesses. Conclusion Because purchasing is a process within the overarching procurement process, both procurement and purchasing are often used interchangeably.