Cost reduction techniques

Cost reduction techniques

 

1. JIT (just in time) system
2. Target costing
3. activity based management
4. life cycle costing
5. kaizen costing
6. business process reengineering
7. total quality management
8. value chain
9. bench marketing
10. management audits

Value analysis - the systematic and critical assessment by an organisation of everyone future of a project to ensure that its cost is no greater than is necessary to carry out the function

Value engineering = the modification of design and system according to value analysis of the product ..

Simplification = the concept of simplification is closely related to standardization
 

Simplification is the process of producing the variety of products manufactured . simplification is concerned with the reduction of the product range, assemblies, parts, materials and design .

Standardization - formulation, publication and implementation guidelines, rules and simplification for common and repeated use at achieving optimus degree of order or uniformity in a given context, discipline or field ..

Application of linear programming - 

1. allocation of scarce resource
2. Scheduling production facilities and resources
3. optimizing capital investment decision
4. inventory control
5. allocation of maintenance

Transportation model - it deals with problems concerning as to what happens to the effectiveness of function when we associate each of the number of origins with each of the possibility of different numbers of destination ..

Application of transportation model ÷

1. Minimise shipping costs

2.  determine low cost location

3. find minimum cost production schedule

4.  military distribution system

Process of transportation model

1. Standardization of problem

2. Check nature of  problem

3. check balance problem

Quality control

System of maintaining standards in manufacture products by testing a sample of output against the specification ..

Quality control techniques

1. Just in time
2. quality at source
3. inspection
4. standard quality control
5. quality circle
6. total quality control

Types of inspection

1. Pre production inspection
2. during production inspection
3. final random inspection