Inventory Management

Question 1

What happened during the 1980’s?

Answer 1

Kaplan argued that management accounting had become lesser than financial accounting.
Production methods and data handling had changed so much that different accounting was needed.

Question 2

Which questions were raised ?

Answer 2

Applicability
Product/Market shift
Inflation

Question 3

Applicability

Answer 3

Johnston and Kaplan said management accounting was inadequate and misleading
Financial reporting was dominant
Management accounting was irrelevant (expressed in irrelevant financial terms)

Question 4

Product/Market shift

Answer 4

Technology of manufacturing changes- accountants are reluctant to change
Market changes- accountants fail to highlight significant shifts

Question 5

Inflation

Answer 5

Financial targets and budgets become obsolete

Physical measures assume greater importance i.e. not about accounting numbers

Question 6

What is just in time?

Answer 6

Producing the required items at the required quality in the required quantities at the precise time scale required

Question 7

Just in time advantages

Answer 7

Reduction in inventory 
Improved product quality
Reduced space requirements 
Shorter lead times
Lower production costs
Increased productivity 
Increased machine utilisation 
Greater flexibility

Question 8

Just in time disadvantages

Answer 8

Delays- can cause big issues
Issues with suppliers
Seasonal changes can be difficult to accommodate 
Large product range difficult to manage 
Difficult involving financial accounts 
Recently being replaced by six sigma