ACCT 001A Lecture Notes - Lecture 21: Moe Williams, Net Present Value, Discount Window
7 Jan 2021
School
Department
Course
Professor
Document Summary
Management tool for dealing with constraints; identifies and focuses on bottlenecks in production process. Bottlenecks production-process steps that limit throughput or number of finished products that go through production process such as machine time from previous example. Once bottleneck identified, management must focus on relieving bottleneck. Birdie discovered that delays in delivery of golf clubs to customers result from extra time taken to order and receive putter from ace putters, so ace might have to speed up delivery or. For example, furniture manufacturers may sell furniture unassembled and unfinished, assembled and unfinished or assembled and finished. Key is that all costs that re incurred up to point where the decision is made are sunk costs and not relevant. Relevant costs are incremental or additional processing costs. Comparison show be made with additional sales revenue that can be earned form processing product further to additional processing costs. If revenue is greater than costs, product should be processed further.
