What is the term for the number of units we wish to produce over a specific period of time?
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Cost per unit information is needed in order to set prices high enough to generate a profit. The cost per unit is derived from the variable costs and fixed costs incurred by a production process, divided by the number of units produced. Variable costs, such as direct materials, vary roughly in proportion to the number of units produced, though this cost should decline somewhat as unit volumes increase, due to greater volume discounts. Fixed costs, such as building rent, should remain unchanged no matter how many units are produced, though they can increase as the result of additional capacity being needed (known as a step cost, where the cost suddenly steps up to a higher level once a specific unit volume is reached). Examples of step costs are adding a new production facility or production equipment, adding a forklift, or adding a second or third shift. When a step cost is incurred, the total fixed cost will now incorporate the new step cost, which will increase the cost per unit. Depending on the size of the step cost increase, a manager may want to leave capacity where it is and instead outsource additional production, thereby avoiding the additional fixed cost. This is a prudent choice when the need for increased capacity is not clear. Show
Formula for the Cost per UnitWithin these restrictions, then, the cost per unit calculation is: (Total fixed costs + Total variable costs) ÷ Total units produced The cost per unit should decline as the number of units produced increases, primarily because the total fixed costs will be spread over a larger number of units (subject to the step costing issue noted above). Thus, the cost per unit is not constant. Example of the Cost per UnitABC Company has total variable costs of $50,000 and total fixed costs of $30,000 in May, which it incurred while producing 10,000 widgets. The cost per unit is: ($30,000 Fixed costs + $50,000 variable costs) ÷ 10,000 units = $8 cost per unit In the following month, ABC produces 5,000 units at a variable cost of $25,000 and the same fixed cost of $30,000. The cost per unit is: ($30,000 Fixed costs + $25,000 variable costs) ÷ 5,000 units = $11/unit Definition: Out of total purchases of a customer of a product or service, what percentage goes to a company defines its market share. In other words, if consumers as a whole buy 100 soaps, and 40 of which are from one company, that company holds 40% market share. Description: There are various types of market share. Market shares can be value or volume. Value market share is based on the total share of a company out of total segment sales. Volumes refer to the actual numbers of units that a company sells out of total units sold in the market. The value-volume market share equation is not usually linear: a unit may have high value and low numbers, which means that value market share may be high, but volumes share may be low. In industries like FMCG, where the products are low value, high volume and there are lots of freebies, comparing value market share is the norm. The significance of market share: Market share is a measure of the consumers' preference for a product over other similar products. A higher market share usually means greater sales, lesser effort to sell more and a strong barrier to entry for other competitors. A higher market share also means that if the market expands, the leader gains more than the others. By the same token, a market leader - as defined by its market share - also has to expand the market, for its own growth. How much market share is enough? Usually, gaining 100% market share is not a good idea, as the risk associated with market actions, like fashion changes, product / use changes will impact the company heavily. Also, the cost and effort to maintain 100% market share against nimble, local or more aggressive smaller competitors can be very high and killing. Most companies decide on a target market share beyond which the cost of acquiring marketshare is more than the profit from that incremental gain.
If you know the result that you want from a formula, but are not sure what input value the formula needs to get that result, use the Goal Seek feature. For example, suppose that you need to borrow some money. You know how much money you want, how long you want to take to pay off the loan, and how much you can afford to pay each month. You can use Goal Seek to determine what interest rate you will need to secure in order to meet your loan goal. If you know the result that you want from a formula, but are not sure what input value the formula needs to get that result, use the Goal Seek feature. For example, suppose that you need to borrow some money. You know how much money you want, how long you want to take to pay off the loan, and how much you can afford to pay each month. You can use Goal Seek to determine what interest rate you will need to secure in order to meet your loan goal. Note: Goal Seek works only with one variable input value. If you want to accept more than one input value; for example, both the loan amount and the monthly payment amount for a loan, you use the Solver add-in. For more information, see Define and solve a problem by using Solver. Step-by-step with an exampleLet's look at the preceding example, step-by-step. Because you want to calculate the loan interest rate needed to meet your goal, you use the PMT function. The PMT function calculates a monthly payment amount. In this example, the monthly payment amount is the goal that you seek. Prepare the worksheet
Use Goal Seek to determine the interest rate
If you know the result that you want from a formula, but are not sure what input value the formula needs to get that result, use the Goal Seek feature. For example, suppose that you need to borrow some money. You know how much money you want, how long you want to take to pay off the loan, and how much you can afford to pay each month. You can use Goal Seek to determine what interest rate you will need to secure in order to meet your loan goal. Note: Goal Seek works only with one variable input value. If you want to accept more than one input value, for example, both the loan amount and the monthly payment amount for a loan, use the Solver add-in. For more information, see Define and solve a problem by using Solver. Step-by-step with an exampleLet's look at the preceding example, step-by-step. Because you want to calculate the loan interest rate needed to meet your goal, you use the PMT function. The PMT function calculates a monthly payment amount. In this example, the monthly payment amount is the goal that you seek. Prepare the worksheet
Use Goal Seek to determine the interest rate
What is the term for the maximum amount of time each workstation has to complete its assigned task?What is the term for the maximum amount of time each workstation has to complete its assigned task? cycle time.
What is type of layout?There are four basic layout types: process, product, hybrid, and fixed position. In this section we look at the basic characteristics of each of these types.
What is process layout in operations management?A process layout is a type of facility layout. Organizations often use process layouts to design floor plans and arrange equipment for maximized efficiency. Plants with a process layout may arrange work stations, machinery, tools and other equipment in groups according to the functions they perform.
What is the longest task in a process called?c) A bottleneck task is the longest task in a process.
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