Strategic Planning Flashcards
Material requirements planning
Material requirements planning is a planning system that focuses first on the amount and timing of finished goods demanded and then determines the demand for materials, components, and subassemblies at each of the prior stages of production.
Sensitivity analysis
determines how the results will change if the original data or the underlying assumptions change. It is the process of identifying the data changes that alter optimal solutions and the decisions made based on that solution.
The program evaluation and review technique (PERT)
is a procedure for planning a project. It uses network analysis to determine the time estimates for the steps of an activity in each successive time period.
y = Bx + A.
A is the y INTERCEPT
B is the slope of the line. (Linear means a straight line, so the slope of the line is the same at any point on the line.)
y is the dependent variable since it is determined based on the other three terms.
x is the independent variable since it is an input to the equation, not based on the other terms.
When estimating a cost function (y), x is the cost driver that determines the value of y.
1- Linear programming 2- Queuing theory 3- Cost-volume-profit analysis 4- Exponential smoothing 5- Time series analysis
1- is a model for the allocation of scarce resources.
2- relates to the balancing of the cost of waiting with the cost of service; for example, the cost of lost sales resulting from long lines at the cash register versus the cost of opening another cash register.
3- is a model used to aid decision making relating to product lines, pricing of products, marketing strategy, and utilization of production facilities.
4- is a statistical method that is useful as a sales forecasting technique. prediction technique that uses weighted averaging applied to time series observations adjusted so that most recent observations heavily influence the results and prior random variation is minimized.
5- focuses on evaluation of trends over time. It may entail several components including seasonal variation and secular trends
How many levels of integrated planning
Pooled
Sequential
Reciprocal
Graphs
FIxed Costs
Variable Costs
Determined by the 0 axis
Determined by Steepness of the slope
Imputed costs
are implied costs; they are not known with certainty and must be estimated
incremental costs
Incremental costs represent the difference in the total cost between two alternatives; are relevant in decision making
BY product
1- Expenses
2- Income
1- go to the parent
2- any income from the byproduct offset the parent’s expense for the main product
1- Relevant cost
2- Throughput cost
1- decision making because relevant cost includes only future costs that differ between alternatives being considered.
2- includes only direct production costs (direct material and direct labor) as product costs
1- Accounting Profit
2- Economic Profit
3- Normal Profit
1 - DM, DL, MOH, COGS - GROSS PROFIT
2 - Accounting Profit - Implicit/Explicit Costs
3 - Required to keep profits at there current use
1- dual-rate method
2- direct allocation method
3- step-down allocation method
4- linear algebra or reciprocal allocation method
1- is really a refinement of either the direct or step-down methods, depending upon how it is applied. In the dual-rate method, variable and fixed costs are allocated to departments in a two-step process, variable costs on current use and fixed costs on a long-term, maximum capacity basis.
2- cost of service departments directly to the production departments without any intermediate allocations to other service departments. Thus, this method does not recognize any reciprocity of services among service departments.
3- service department costs to other service departments and production departments usually starting with the service department that provides the most service to other service departments. This method allows for partial recognition of reciprocity of services among service departments.
4- recognizes reciprocity among service department by explicitly including the mutual services rendered among support departments
Overhead Rate
Estimated annual overhead ÷ Estimated annual direct labor = Overhead Rate
Under applied Overhead situations
1 - lower volume then budgeted
2 - higher fixed cost then expected
