Strategic capacity planning essay

Executive Functions What is Planning?

Strategic capacity planning essay

Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Specifically, address issues related to capacity planning, aligning employee incentives with lean goals, and product mix decision making.

In contrast with standing costing system, lean accounting proposes the value stream as a single cost collector. Lean organizations dedicate resources Strategic capacity planning essay value stream.

Costs are recognized as they incurred rather than being inventoried and matched to revenues G. Lean accounting is definitely important to senior managers in terms of capacity planning, aligning employee incentives with lean goals, and product mix decision making.

A Box Score Report emphasizing on unused capacity and practice of direct costing for capacity planning is used for capacity planning under lean accounting system. Exhibit 1 shows a Box Score Report for a hypothetical value stream.

Box Score Report for a hypothetical value stream Adapted from G.

Strategic capacity planning essay

Exhibit 1 demonstrates the capacity of production resources that are necessary in satisfying changing demand of the products. Three elements of capacity accounting are productive capacity, non-productive capacity, and available capacities.

Then they could discover in which way they can free up an additional10 percent of capacity. During the process of implementing lean, senior managers may want to align the incentives of employees with lean goals. Lebanon Gasket Company has been dramatically improving operational performance, which could be an indication that the company successfully gained the incentives of employees with lean goals.

However, the financial results were disappointing. It is noted that the financial results are the outcome of standard costing system. If they still get unfavorable results, the reason may lie in the large headcount of the employees.

If this is the case, the company may refer to average annual salaries as shown on page 7 and collect some other labor related data to see if it is necessary to layoff some employees.

From the two exhibits, senior managers can tell which value stream produces higher amounts of products, and which value stream has lower unit cost. Therefore, senior managers can further decide whether or not to apply extra resources to make more profitable products. Accounting information organized by value streams is beneficial to senior managers as it helps them to compare the two value stream in great detail.

In sum, senior managers need to use various lean accounting tools such as value stream analysis, box score report, and Value Stream Profit and Loss Statement to make sound decisions. The lean accounting information provided in terms of value streams is important to senior managers.

Strategic capacity planning essay

Van Der Merwe, A. The Case for Lean Accounting: Cost Management, 26,3, pp.

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Strategic Plan for Chipotle Mexican Grill Introduction Since its creation in , Chipotle has become somewhat of a phenomenon within the realm of the restaurant industry. Strategic Capacity Planning Essay Sample. Strategic capacity planning is a great process design tool that allows an organization to evaluate its extended supply chain and its cost-effectiveness, which can drive its capital expenditures and strategies to build a world-class supply chain to compete against other organizations (Citrin, n.

d.). Capacity planning is a strategic process whereby a company determines what level of capacity it will need to satisfy the level of demand for its products or services over a period of time.

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professional essay on Capacity Planning: The Strategic Value