management accounting

Arab Open University

B292: TMA – Spring Semester 2017/2018

Cut-Off Date: April 30 2018

About TMA:

The TMA covers the management accounting concepts and practices in the businesses. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of one of the important concepts in management accounting which has emerged as an alternative to the EOQ model. The EOQ model is concerned with minimizing the overall cost of inventory. It is not concerned with minimizing the amount of inventory held. The JIT, on the other hand, is concerned with minimizing the amount of inventory held and ideally eliminating inventory all together. Modern technology has enabled some organizations to achieve the JIT goal of almost zero inventory holdings. This TMA requires you to apply the course concepts. The TMA learning objectives are intended to:

· Enhance student ability to understand the benefits of JIT approach.

· To emphasize the importance of JIT to the company.

· Assess students’ understanding of key learning points within unit 3.

· Increase the students’ knowledge about Just –in-time inventory control techniques that focus on reducing the cost of placing an order and reducing or eliminating inventory.

· Assess student’s ability to understand the conditions that must be applied for JIT to work well.

· Develop students’ communication skills, such as memo writing, essay writing, analysis and presentation of material.

· Develop the ability to understand and interact with the nature of the managerial accounting tools in reality .

The TMA requires you to:

1. Review various study sessions beside the supplementary materials.

1. Conduct a simple information search using the internet.

1. Present your findings in not more than 1500 words ± 10%.

1. You should use a Microsoft Office Word/excel and Times New Roman Font of 12 points.

1. You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment.

Criteria for Grade Distribution:

Case study-DHLC

Diet for Healthy Life Company (DHLC) produces four types of frozen TV dinners that it sells to supermarkets and independent grocery stores. The company operates from two locations: a manufacturing plant and a refrigerated warehouse located a few blocks away. (Administrative offices are located in the manufacturing plant.)

The type of dinners to be produced each week is scheduled a week in advance, based on customer order. The number of dinners produced, however, is always the same. The company runs its production facilities at full capacity – 20,000 units per day – to minimize fixed manufacturing costs per unit.

Every Friday, local suppliers deliver to DHLC factory the fresh vegetable, chicken, fish, and other ingredients required for the following week's production.

(Materials are abundant in the region.) These ingredients then are cut into meal-sized portion, "fresh frozen" using special equipment, and transported by truck to the refrigerated warehouse. The company maintains an inventory of frozen ingredients equal to approximately two weeks' production.

Every day, ingredients of 20,000 dinners are bought by the truck from warehouse to the factory. All dinners produced in a given production run must be of the same type. However, production workers can make the machinery "setup" changes necessary to produce a different type of frozen dinner in about 10 minutes.

Monday through Thursday, DHLC produces one type of dinner each day. On Friday, it manufactures whatever types of dinners are needed to balance its inventories. Completed frozen dinners are transported back to the refrigerated warehouse on a daily basis.

Frozen dinners are shipped daily from the warehouse to customers. All shipments are sent by independent carriers, DHLC usually maintains about a 10-day inventory of frozen dinners in the warehouse. Recently, however, daily sales have been averaging about 2,000 units less than the level of production, and the finished goods inventory has swelled to a 25-day supply.

Noura, the controller of DHLC, recently read about JIT inventory system used by Toyota in its Japanese production facilities. She is wondering whether a JIT system might benefit DHLC.

Instructions

1- In general terms, describe a JIT manufacturing system. Identify the basic goals of a JIT manufacturing system and any basic conditions that must exist for the system to operate effectively.

2-Describe if the JIT philosophy can be adopted/applied in all departments of the organization rather than only in inventory management. What role could people play in the organization to make this JIT system work?

3- Pinpoint any non-value-added activities in DHLC operations that might be reduced or eliminated in a JIT system. Also, identify specific types of costs that might be reduced or eliminated.

4- Assume that DHLC does adopt a JIT manufacturing system, how would the relationship with its suppliers change? Describe the impact of this relationship on price, quality, and delivery and on lead time.

5-Explain whether or not you think that a JIT system would work for DHLC. Provide specific reasons supporting your conclusion.

Good luck