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Today’s World: Lean Manufacturing Environments and Cost Management

Received: 3 February 2017     Accepted: 23 February 2017     Published: 23 October 2017
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Abstract

This paper will help to identify the interrelationship factor of cost management in lean production system. Standard overhead costs are sum up of expected direct labor & machine hours. In-fact major problem of cost is not direct labor or material, but the cost allocation. Before direct labor was a huge expense for the organizations, but now usually all works is done by robots and electronics instruments, so direct labor cost is almost less than 8% of the total costs. But in opposite side overhead cost is higher than before because extensive usage of machineries. As shown in Table 1 and 2, any changes in a product mix can mislead and extra addition any other product costs, if direct labor saving took for product B, so product A will bear extra cost of overhead because of changes in product B, in-fact no changes in product A process. The most advanced level in the lean production is “Four Wall” Transfer to finished products and vendor receipts. The control requirements of four walls are: Continuous product flow, short lead time and few scrap.

Published in Journal of Investment and Management (Volume 6, Issue 4)
DOI 10.11648/j.jim.20170604.11
Page(s) 87-91
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Cost Management, Lean Manufacturing, Schedule Performance, Value Added Activities, Poor Quality

References
[1] Ledbetter, M. E. and SNYDER, C. A. (1993) Work-In-Process Inventory Control for Repetitive Manufacturing In An MRP Environment: A Case Study.
[2] Khan, S. A. R; Dong, Q; Zhang, Y. (2016) Usage of RFID technology in supply chain: benefits and challenges, International Journal of Applied Engineering Research, Vol. 11, No. 5, pp. 3720-3727.
[3] Khan, S. A. R; Dong, Q; Wei, S; Zaman, K; Zhang, Y. (2016) Environmental logistics performance indicators affecting per capita income and sectoral growth: evidence from a panel of selected global ranked logistics countries, Environmental Sciences and Pollution Research, DOI 10.1007/s11356-016-7916-2.
[4] Fawcett, S. E. (1995) Using Strategic Assessment To Increase The Value-Added Capabilities of Manufacturing and Logistics.
[5] Jostes, T. and Helms, M. M. (1995) The Use Of Buffer Inventory As An Asset Management Tool In A Quick-Response Environment.
[6] Spener, M. S; Daugherty, P. J. and Rogers, D. S. (1994) Towards A Deeper Understanding Of JIT: A Comparison Between APCIS And Logistics Managers.
[7] Lee, J; Ristroph, J. H; Zhu, Zhiwei; Ruangdet, M. (1993) Performance Evaluation of Lot-Sizing Methods with Multiple Quantity Discounts In A Rolling Horizon Environment.
[8] Chen, S; Chen, Rongqiu. (1997) Manufacturer- Supplier Relationship In A JIT Environment.
[9] Chorafas, D. N. (2001) Integrating Enterprise Resource Planning, Customer Relationship Manager, Supply Chain Management And Smart Materials.
[10] Ratliff, H. D. (2013) 10 Rules of Supply Chain Management And Logistics Optimization.
[11] Alternburg, K; Griscom, D; Hart, J; Smith, F. (1999) Just-In-Time Logistics Support For The Automobile Industry.
[12] Quayle, M. (2006) Purchasing And Supply Chain Management: Strategies And Realities.
[13] Mclvor, R. (2002) Integrated Manufacturing Systems The International Journal of Manufacturing Technology Management Vol. 13 Number 8, 2002.
[14] Feld, W. M. (2001) Lean Manufacturing Tools, Techniques, And How To Use Them, ISBN 1-57444-297-X.
[15] Inman, R. A. (1999) Environmental Management: New Challenges For Production And Inventory Managers.
[16] Steele, A. L. (2001) Cost Drivers And Other Management Issues In The JIT Supply Chain Environment.
[17] Hubbary, D. T; Taylor, S. G; Bolander, S. F. (1992) Process Flow Scheduling In A High-Volume Repetitive Manufacturing Environment.
[18] Khan, S. A. R; Dong, Q; Zhang, Y. (2015) Classification of the Important & Critical Factors in Enterprise Resource Planning, Life Science Journal, Vol. 12, No. 12.
Cite This Article
  • APA Style

    S. A. Rehman Khan, Yu Zhang, Syed Shahid. (2017). Today’s World: Lean Manufacturing Environments and Cost Management. Journal of Investment and Management, 6(4), 87-91. https://doi.org/10.11648/j.jim.20170604.11

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    ACS Style

    S. A. Rehman Khan; Yu Zhang; Syed Shahid. Today’s World: Lean Manufacturing Environments and Cost Management. J. Invest. Manag. 2017, 6(4), 87-91. doi: 10.11648/j.jim.20170604.11

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    AMA Style

    S. A. Rehman Khan, Yu Zhang, Syed Shahid. Today’s World: Lean Manufacturing Environments and Cost Management. J Invest Manag. 2017;6(4):87-91. doi: 10.11648/j.jim.20170604.11

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  • @article{10.11648/j.jim.20170604.11,
      author = {S. A. Rehman Khan and Yu Zhang and Syed Shahid},
      title = {Today’s World: Lean Manufacturing Environments and Cost Management},
      journal = {Journal of Investment and Management},
      volume = {6},
      number = {4},
      pages = {87-91},
      doi = {10.11648/j.jim.20170604.11},
      url = {https://doi.org/10.11648/j.jim.20170604.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20170604.11},
      abstract = {This paper will help to identify the interrelationship factor of cost management in lean production system. Standard overhead costs are sum up of expected direct labor & machine hours. In-fact major problem of cost is not direct labor or material, but the cost allocation. Before direct labor was a huge expense for the organizations, but now usually all works is done by robots and electronics instruments, so direct labor cost is almost less than 8% of the total costs. But in opposite side overhead cost is higher than before because extensive usage of machineries. As shown in Table 1 and 2, any changes in a product mix can mislead and extra addition any other product costs, if direct labor saving took for product B, so product A will bear extra cost of overhead because of changes in product B, in-fact no changes in product A process. The most advanced level in the lean production is “Four Wall” Transfer to finished products and vendor receipts. The control requirements of four walls are: Continuous product flow, short lead time and few scrap.},
     year = {2017}
    }
    

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    AU  - S. A. Rehman Khan
    AU  - Yu Zhang
    AU  - Syed Shahid
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    JF  - Journal of Investment and Management
    JO  - Journal of Investment and Management
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    PB  - Science Publishing Group
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    AB  - This paper will help to identify the interrelationship factor of cost management in lean production system. Standard overhead costs are sum up of expected direct labor & machine hours. In-fact major problem of cost is not direct labor or material, but the cost allocation. Before direct labor was a huge expense for the organizations, but now usually all works is done by robots and electronics instruments, so direct labor cost is almost less than 8% of the total costs. But in opposite side overhead cost is higher than before because extensive usage of machineries. As shown in Table 1 and 2, any changes in a product mix can mislead and extra addition any other product costs, if direct labor saving took for product B, so product A will bear extra cost of overhead because of changes in product B, in-fact no changes in product A process. The most advanced level in the lean production is “Four Wall” Transfer to finished products and vendor receipts. The control requirements of four walls are: Continuous product flow, short lead time and few scrap.
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Author Information
  • School of Supply Chain and Management, Chang’an University, Xi’an, China

  • School of Printing and Packaging, Xi’an University of Technology, Xi’an, China

  • School of Foreign Languages, Happy Home Foundation, Karachi, Pakistan

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