Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Stock costs and their management in manufacturing organisations

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Solutions to review questions 21.1

Stock costs and their management in manufacturing organisations
Personal observation is often more effective in JIT plants than in traditional plants. A JIT plant’s production process layout is streamlined and logically laid out, and operations are not obscured by piles of stock or rework. Such plants are easier to evaluate visually than cluttered plants where the flow of production proceeds haphazardly across the plant.
Solutions to review questions
21.1
A
demand-pull system (like a just-in-time production system) is one in which demand triggers each step of the production process, starting with customer demand fora finished product atone end of the process and working all the way back to the demand for direct materials at the other end of the process. Demand pulls a product through the production line. A
push-through system, often described as a materials requirement

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 planning (MRP) system, uses (a) demand forecasts for the final products (b) a bill of materials outlining the materials, components and subassemblies for each final product and (c) the quantities of materials, components, subassemblies and product stocks to predetermine the necessary outputs at each stage of production.

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