Companies move to Activity -Based Costing to better understand the true costs of goods and services. The activities that go into them Resources consumed by these activities ABC contrasts with traditional costing cost accountingwhich sometimes assigns costs using somewhat arbitrary allocation percentages for overhead or the so-called indirect costs. As a result, ABC and traditional cost accounting can estimate the cost of goods sold and gross margin very differently for individual products. Contradictory and uncertain cost estimates can be a problem when management needs to know exactly which products are profitable and which are selling at a loss.
Hire Writer ByCustom Molds operations involved two distinct processes which are fabricating molds and producing plastic parts. All fabrication and production operation were housed in a single facility. Fabrication molds requires a skill-oriented, craftsman-driven process.
When an order is received, a design team, consisting of a design engineer and one of 13 master machinists, reviews the design specification. Working with the customer, the team comes up with the final specification for the mold and passes it to the master machinist for fabrication.
At the same time, the specification is given to the purchasing department, who orders the required raw materials. It usually takes about three to four weeks for the raw material to arrive. Once the materials have been received, the plant master scheduler reviews the workload of the assigned master machinist and schedules the mold for fabrication.
Fabricating a mold usually takes up to two to four weeks, depending in the amount of work the machinist already has scheduled. The fabrication process takes only three to five days. Once completed, the mold is tested and inspected, where it is used to produce a small number of parts on one of the injection molding machines.
If the mold passed the required specification, it is then sent for cleaning and polishing, and then packed and sent to customers. If at all the mold fails, it is sent to the maser machinist for retooling and the process starts all over.
Currently, Custom Molds holds a lead time of nine weeks for delivery of the molds. The manufacturing of the plastic parts is different from mold fabrication. An order for parts may be received in conjunction with an order for a mold to be fabricated.
For instances, if the Custom Molds already have made the molds, an order may be jus for parts. If the mold is already available, the order is reviewed by the design engineer, who verifies the part and material specifications.
If the is any doubts, the design engineer will contact the customer and clarifies the doubts. Once the parts and raw materials are accepted, orders are placed for the raw materials and production in scheduled for the order. Chemicals and compounds used for the manufacturing are ordered and received within a week.
When received, the compound is dry-mixed and blended to achieve the correct composition. Then the mixture is wet-mixed to the desired consistency, called slurry, for injection into molding machine. When ready, the slurry is transferred to the injection molding area by an overhead pipeline and deposited in holding tanks adjacent to the injection machines.
The whole process takes only one day. When the slurry is staged and ready, the proper molds are secured from the inventory or from the clean and polish operation if new molds were fabricated for the order and the parts are manufactured.
Although different parts require different temperature and pressure settings, the time to produce a part is relatively constant.Get breaking Finance news and the latest business articles from AOL. From stock market news to jobs and real estate, it can all be found here.
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Case Study Background Custom Molds Inc produces custom made molds for plastic parts and manufactures connectors for the electronics industry. The father founders of Custom Molds Inc are father and son, Tom and Mason Miller, in which is located in Tucson, Arizona.
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