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Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project [1] or the construction of a building. [2] In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels. [3]
Kaizen costing is a cost reduction system used a product's design has been completed and it is in production. [1] Business professor Yasuhiro Monden [2] defines kaizen costing as . The maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level. [citation needed]
Agile Manufacturing is a modern production approach that enables companies to respond swiftly and flexibly to market changes while maintaining quality and cost control. This methodology is designed to create systems that can adapt dynamically to changing customer demands and external factors such as market trends or supply chain disruptions.
The same period, saw the rise of books and articles with similar concepts and methodologies but with alternative names, including cycle time management, [35] time-based competition, [36] quick-response manufacturing, [37] flow, [38] and pull-based production systems. [39] There is more to just-in-time than its usual manufacturing-centered ...
An average cost per unit of product is then calculated for each job. Process costing systems assign costs to one or more production processes. Because all units are identical or very similar, average costs for each unit of product are calculated by dividing the process costs by the number of units produced.
Labor costs are defined by categories (e.g. service labor or manufacturing labor), the attribution of a labor rate for each category, and a certain number of labor hours. [1] Because of its identifiability, labor typically is one of the most common starting points of manipulation in the hope of cost reduction. [6]
Many cost-based organizations aim for machines and labor to be utilized at close to 100% of capacity. QRM criticizes this approach as counterproductive to lead time reduction based on queuing theory, which shows that high utilization increases waiting times for products. In order to be able to handle high variability in demand and products, QRM ...
The number of one-on-one channels of communication grows more rapidly than the number of workers, thus increasing the time and costs of communication. At some point one-on-one communications between all workers becomes impractical; therefore only certain groups of employees will communicate with one another (e.g. within departments or within ...