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Supply Management: TQM and CI

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#1. Discuss the concepts of centralized vs. decentralized purchasing authority, identify their relative advantages and disadvantages, and provide examples of when each may be appropriate.

#2. Differentiate between the principles & practices of Purchasing & Supply Management used in the Public sector (e.g. Government) and the Private Sector (e.g. manufacturing and retail). What are the salient differences and how do these differences affect the establishment or buyer-supplier relationships and the implementation of the Purchasing & Supply Management processes?

#3. Discuss the transformation of buyer-supplier relationships? What are the three levels of buyer-seller relationships and their relative differences?

#4. What is the relationship between Total Quality Management (TQM) and Continuous Improvement (CI)? Discuss the roles of Quality Assurance and Quality Control and their relative importance in demonstrating this relationship? What is the role of quality in the development of an E-Commerce capability?

#5. Explain the role of Purchasing & Supply Management in new product development, specifications development and a standardization program. How can cross-functional teams be used to create specifications for new products and to set up effective standardization programs. Do TQM and CI apply to the development of specifications for new products and standardization programs?

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Hello, thanks again for using Brainmass. I apologize for the previous confusion regarding your questions. I've updated your solution to include all attached questions. Because of the topic of your problem, I made an assumption on your request for assistance that you were stuck only on Question #1. While we're not permitted to complete assignments for customer/students, I've attached my summary of several background resources along with a few ideas for examples to get you started. I look forward to assisting you again in the future, and as always, if I've misunderstood your request, please let me know how to better focus my efforts to assist you.

#1. Discuss the concepts of centralized vs. decentralized purchasing authority, identify their relative advantages and disadvantages, and provide examples of when each may be appropriate.
Centralized organizations consolidate power through decision-making ability into a few positions with little to no input from subordinate positions. This is helpful in that it enables companies to emphasize stability, consistency, and allows the company to remain very pure to founding principles. Specifically with purchasing, centralization offers the ability to "reduce dupilication of effort," pool corporate orders to leverage volume discounts, enables very effective inventory control, and consolidate transportation costs," (Q-Finance, nd). The primary drawback to centralization is the cost in diverse ideas and effort-employee creativity and initiative is stifled through the inability to affect change, and the strengths of local managers with relational systems cannot be leveraged.

Centralized purchasing is appropriate for large organizations with little segmentation. This leverages the benefits of volume discounts and limited transportation issues without giving up much in the way of local relational benefits. A manufacturing enterprise, even with many factories, would be an ideal candidate for centralized purchasing authority for their supply. Another consideration would be a service-based organization- office supplies are highly substitutable and any access to volume discounts would be value added.

Decentralized organizations emphasize division of labor across divisions and authority levels. This is helpful in that it encourages personal initiative across the organization-coupled with effective motivational systems, decentralized authority leverages strengths from more employees. For example, a decentralized purchasing authority may have extensive knowledge of the local supply market, as well as the personal relationships to best leverage ...

Solution Summary

Five questions answered regarding purchasing and supply management, in both public and private sectors. Discusses the evolution of buyer-supplier relationships, total quality management (TQM) and continuous improvement (CI), and product development cycles. References included.

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See Also This Related BrainMass Solution

Randa Company, Plaza Company.

Attached find 4 questions I did not do well on, need to get correct work and show how results were achieved.

EXERCISE 18-13
Given the following selected account balances of Randa Company, prepare its manufacturing statement in proper form for the year ended on December 31, 2005. Include a listing of the individual overhead account balances in this statement

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,252,000
Raw materials inventory, Dec. 31, 2004 . . . . . . . . . . 39,000
Goods in process inventory, Dec. 31, 2004 . . . . . . . 55,900
Finished goods inventory, Dec. 31, 2004 . . . . . . . . . . 64,750
Raw materials purchases . . . . . . . . . . . . . . . . . . . . . 177,600
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,000
Factory computer supplies used . . . . . . . . . . . . . . . 19,840
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,000
Repairs?Factory equipment . . . . . . . . . . . . . . . . . 7,250
Rent cost of factory building . . . . . . . . . . . . . . . . . . 59,000
Advertising expenses . . . . . . . . . . . . . . . . . . . . . . . 96,000
General and administrative expenses . . . . . . . . . . . . 131,300
Raw materials inventory, Dec. 31, 2005 . . . . . . . . . . 44,700
Goods in process inventory, Dec. 31, 2005 . . . . . . . 43,500
Finished goods inventory, Dec. 31, 2005 . . . . . . . . . . 69,300

Check Cost of goods manufactured,
$546,390

PROBLEM 18-2A
A trip through a drive-up window of any leading fast-food restaurant is useful in understanding concepts such as total quality management (TQM), just-in-time (JIT), and continuous improvement (CI). Each restaurant can be viewed as a small manufacturing center. List two fast-food restaurants you are familiar with in the first column of the following table (e.g., McDonald's, Taco Bell, Burger King, and KFC). Record in the table how each company is putting each of these lean business concepts into
action, both favorably and unfavorably.

Restaurant TQM JIT CI
1.
2.
Required
Discuss the potential contributions and responsibilities of the managerial accounting professional in
helping an automobile manufacturer succeed. (Hint: Think about information and estimates that a
managerial accountant might provide new entrants into the sports utility market.)

EXERCISE 18-5
Following are three separate events affecting the managerial accounting systems for different companies.
Match the management concept(s) that the company is likely to adopt for the event identified.
There is some overlap in the meaning of customer orientation and total quality management and, therefore, some responses can include more than one concept.
Event Management Concept
_______ 1. The company starts measuring inventory a. Total quality management (TQM)
turnover and discontinues elaborate
inventory records. Its new focus is b. Just-in-time (JIT) system
to pull inventory through the system.
_______ 2. The company starts reporting measures c. Continuous improvement (CI)
on customer complaints and product
returns from customers. d. Customer orientation (CO)
_______ 3. The company starts reporting measures
such as the percent of defective products
and the number of units scrapped.

PROBLEM 18-8A
The following calendar year-end information is taken from the December 31, 2005, adjusted trial balance and other records of Plaza Company.
Advertising expense . . . . . . . . . . . . . . . . . $ 30,750 Direct labor . . . . . . . 677,480
Depreciation expense?Office equipment .. 9,250 Income taxes expense 235,725
Depreciation expense?Selling equipment . . 10,600 Indirect labor . . . . .58,875
Depreciation expense?Factory equipment . 35,550 Miscellaneous production costs . . . 10,425
Factory supervision . . . . . . . . . . . . . . 104,6000 Office salaries expense . .. . . . . . . . . 65,000
Factory supplies used . . . . . . . . . . . . . . . . . . 9,350 Raw materials purchases . . . . . 927,000
Factory utilities . . . . . . . . . . . . . . . . . . 35,000 Rent expense?Office space . . . . 24,000
Inventories Rent expense?Selling space . . . 28,100
Raw materials, December 31, 2004 . . . . . 168,850 Rent expense?Factory building . . 78,800
Raw materials, December 31, 2005 . . . . 184,000 Maintenance expense?Factory equipment . 37,400
Goods in process, December 31, 2004 . . . .17,700 Sales .. . . . . . . . . . . . . . . . . . 4,527,000
Goods in process, December 31, 2005 . . . . . ,380 Sales discounts . . . . . . . . . . . . . . 64,500
Finished goods, D ecember 31, 2004 . .169,350 Sales salaries expense .394,560
Finished goods, December 31, 2005 . 138,490

Required
1. Prepare the company's 2005 manufacturing statement.
2. Prepare the company's 2005 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
Analysis Component
3. Compute the (a) inventory turnover and (b) days' sales in inventory for both its raw materials inventory and its finished goods inventory (see Chapter 6). Discuss some possible reasons for differences between these ratios for the two types of inventories.

Check (1) Cost of goods
manufactured, $1,955,650

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