DANCEST 805 Lecture Notes - Lecture 15: Service Design, Production Planning, Human Factors And Ergonomics

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2 Oct 2020

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Session 5 textbook chapter strategic capacity planning for products and services . Capacity refers to an upper limit or ceiling on the load that an operating unit can handle. The load might be in terms of the number of physical units produced or the number of services performed. The operating unit might be a plant, department, machine, store or worker. Capacity needs include equipment, space and employee skills. The goal of strategic capacity planning is to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand. Organizations become involved in capacity planning for various reasons, among which are changes in demand, changes in technology, changes in the environment, and perceived threats or opportunities. Because of uncertainties, some organizations prefer to delay capacity investment until demand materializes. However, such strategies often inhibit growth because adding capacity takes time and customers won"t usually wait.

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note: Working managers may complete this exercise based on the practices of their own organizations. Students may complete this exercise based on the practices of a current or previous employer. Instructions 1. Select and describe the boundaries of the system of interest; the term âorganizationâ will be used to refer to this selected system. You may select a team, a department, a small organization (e.g., an office practice), or an entire organization. 2. To familiarize yourself with the criteria, review the section called âCategory and Item Descriptionsâ in the Baldrige Criteria for Performance Excellence available from: www.nist.gov/baldrige/ publications/hc_criteria.cfm 3. The Organizational Assessment Worksheet provides a general description of the criteria category followed by selected questions from the respective 2011â2012 Health Care Criteria for Performance Excellence category. 4. Based on the system selected in question 1, write a brief reply to the selected questions. Briefly describe your organization, including its services; size; geographic community; key patient or customer groups; and current facilities, equipment, and technology, as well as the number of patients or clients it serves. Briefly describe your organizationâs key challenges and your organizationâs current performance improvement system. How do senior leaders deploy your organizationâs vision and values through your leadership system, to the workforce, to key suppliers and partners, and to patients and stakeholders as appropriate? How do senior leaders encourage frank two-way communication throughout the organization? How does your organization conduct strategic planning? Summarize your organizationâs action plans, how they are deployed, and key action plan performance measures or indicators. How do you identify patient, stakeholder, and market requirements for service offerings? How do you build and manage relationships with patients and stakeholders to meet their requirements and exceed their expectations at each stage of their relationship with you? What are your key organizational performance measures? How do you use these data and information to support organizational decision making and innovation? How do you assess your workforce capability and capacity needs, including skills, competencies, and staffing levels? How do you address workplace environmental factors to ensure and improve workplace health, safety, and security? How do you design and innovate your work processes to meet all the key requirements? How do you improve your work processes to improve healthcare outcomes, to achieve better performance, to reduce variability, and to improve healthcare services? Provide data for one key measure or indicator of healthcare outcomes that is important to your patients and stakeholders. Provide data for one key measure or indicator of patient or stakeholder satisfaction. Provide data for one key measure or indicator of financial performance. Provide data for one key measure or indicator related to operational performance. Provide data for one key measure related to achieving legal, regulatory, and accreditation requirements. Prioritizing Improvement Opportunities 1. Review the responses to the organizational assessment questions. 2. Note any questions for which you could not provide a response (i.e., the organization does not have a defined process or approach to address the topic of the question). 3. Review the organizational performance results data. 4. Select one or more measures that demonstrate less than desirable results. 5. Select one item from question 2 or 4 as the performance gap for the performance improvement exercise .

magentachinchilla174

Can someone help with this case please, and:

Fill in all the blanks spaces in the spreadsheet for the 2017 column and the 2017 %rev column

Balance the B/S

Answer all questions in full sentence format

Please put in the correct number for forecasted PP&E based on narrative (I highlighted the phrase in the narrative)

Show work for how you calculated the forecasted interest for 2017.

Thank you so much for all your help.

After the financial analysis based on 2016 preliminary estimates was completed, a number of changes were adopted to improve financial and business results for S&S Air during 2016. The customer that awarded the large 40 aircraft order agreed to make interim payments as finished aircraft were delivered (for a price concession). Revenue was revised up slightly due to updated marketing plans. Expenses were trimmed and controls were established that greatly reduced on hand inventory needs. A portion of the line of credit was converted to a 5 year, fixed rate loan. Cash on hand and general liquidity was forecasted to improve to acceptable levels by the end of the year.

Mark and Marie approached Chris about creating a forecast for 2017. They had learned the value of the financial analysis done for 2016 and wanted to get a look at any issues or problems that might be looming in the future. Of particular concern was the continuing need for external funds as the firm continued to grow. The general consensus of Mark and Marie was that S&S Air should realize an increase in revenue of 17% in 2017 from the 2016 results, based on anticipated demand of aircraft. It was felt expenses would change by the same percent of sales as incurred in 2016. However, it was estimated that annual depreciation in 2017 would increase 70% (to a total of $1,075,000), due to the substantial increase in assets that were going to be needed. Finally, Chris said that her banking contract indicted that interest expense should be about 8% of both notes payable and long term debt in 2017.

By the end of 2016, the firm would be operating at capacity; it was estimated that further growth in 2017 would require $6,500,000 (including all depreciation â that is, adding $6.5 million to the 2016 Net PP&E to derive PP&E for 2017) in plant upgrades and additions to meet anticipated production volume. Everyone felt that all other asset categories (including cash) and current liabilities (including the line of credit) would change by percent of revenue. Both owners were concerned about where any needed external financing would come from. Neither was interested in raising any further equity, and agreed that they would likely secure long term financing for any external funds needed. The plan was to pay dividends totaling $400,000 in 2017.

Chris knew that a key exhibit would be the forecast mode. She planned to set up the model so that a key input would be the sales growth forecast. The âplugâ to reconcile the balance sheet would be long term debt.

Q U E S T I O N S (please use full sentences)

1) Completed forecast model. Fill in all blanks for the 2017 and 2017 % of rev columns.

2) Compare PM, ROA, and ROE from 2016 to 2017. Why the differences?

3) Compare debt ratios from 2016 to 2017. Why the differences?

4) Compare total asset turnover from 2016 to 2017. Why the difference? What observations can you make regarding capacity utilization from 2016 to 2017?

5) Estimate the maximum revenue possible given the new level of assets in 2017, based on TATO in 2016 (at full capacity).

6) If COGS could be decreased by 1% of revenue, how much increase in EBIT would result? Express the change in EBIT in both dollar terms and % change.

7) Do a DuPont analysis on S&S Air for both 2016 and 2017. If the owners asked you for any issues or concerns about the basic results forecasted for 2017, what would you tell them? Consider operating, investing, and financing issues.

7a) Operating comments:

7b) Investing comments:

7c) Financing comments:

Income statement	2016	% rev			2017	% rev
Sales	$21,566,000	100.0%		17%%
COGS	14,786,000	68.6%	% of rev	68.6%
Other expenses	2,375,000	11.0%	% of rev	11.0%
Depreciation	625,000	2.9%	given	1,075,000
EBIT	3,780,000	17.5%	calc
Interest	437,000	2.0%	given	8.0%
Taxable income	3,343,000	15.5%	calc
Taxes (40%)	1,337,200	6.2%	calc TI * tax rate	40.0%
Net income	2,005,800	9.3%	calc
Dividends	375,000	1.7%	given	400,000
Add to RE	1,630,800	7.6%	calc

B A L A N C E S H E E T
	2016	% rev			2017	%
Current Assets
Cash	425,000	2.0%	% of rev	2.0%
Accounts rec.	855,000	4.0%	% of rev	4.0%
Inventory	689,000	3.2%	% of rev	3.2%
Total CA	1,969,000	9.1%	calc
Fixed assets
Net PP&E	9,873,000	45.8%	given	6,500,000
Total Assets	11,842,000	54.9%	calc

Current Liabilities
Accounts Payable	727,000	3.4%	% of rev	3.4%
Notes Payable	1,467,000	6.8%	% of rev	6.8%
Total CL	2,194,000	10.2%	calc
Long-term debt	2,908,800	13.5%	PLUG
TOTAL CL + LTL	5,102,800

Shareholder Equity
Common stock	120,000	0.6%	no change
Retained earnings	6,619,200	30.7%	+2017 RE
Total Equity	6,739,200	31.2%	calc

Total L&E	11,842,000	54.9%	calc

Ratio Analysis
	2016	2017
PM
ROA
ROE
Debt / Equity
Debt / Total Assets
Equity Multiplier
Total Asset TO

Thank you

Please help me answer the following questions:
1. Management accounting:
A) is both retrospective, providing feedback about past operations,and also prospective, incorporating forecasts and estimates aboutfuture events.
B) is primarily oriented to external stakeholders.
C) must be consistent with rules formulated by the FinancialAccounting Standards Board (FASB).
D) provides information that is generally available only on aquarterly or annual basis.

2. Management accounting information is BEST described as:
A) providing a signal that something is wrong.
B) identifying and helping to explain what is wrong.
C) simply summarizing information, but giving no indication thatanything is wrong.
D) measuring overall organizational performance.

3. Which of the following would be MOST helpful for a top managerof a company?
A) profitability report of the company
B) information to monitor hourly and daily operations
C) number of customer complaints
D) operating expense summary reported by department

4. The Balanced Scorecard is said to be "balanced" because itmeasures:
A) short-term and long-term objectives.
B) financial and nonfinancial objectives.
C) internal and external objectives.
D) All of the above are correct.

5. The ________ perspective of the Balanced Scorecard asks, "How issuccess measured by our shareholders?"
A) learning and growth
B) customer
C) financial
D) shareholder

6. Defect rates for products and yield percentages in manufacturingare measures of quality included in the ________ perspective of theBalanced Scorecard.
A) financial
B) production
C) process
D) internal

7. The purpose of the Balanced Scorecard is BEST described ashelping an organization:
A) develop customer relations.
B) mobilize employee skills for continuous improvements inprocessing capabilities, quality, and response times.
C) introduce innovative products and services desired by targetcustomers.
D) translate an organization's mission, vision, and strategy into aset of performance measures that help to implement thestrategy.

8. The FIRST step in developing strategic objectives for theBalanced Scorecard is:
A) defining the long-run financial objectives.
B) identifying the target customer.
C) articulating the organization's vision.
D) select objectives for the customer value proposition.

9. Identify the BEST description of the Balanced Scorecard'scustomer perspective. To achieve our firm's vision andstrategy:
A) How do we lower costs?
B) How do we motivate employees?
C) How can we obtain greater profits?
D) How does the company intend to attract, retain, and deepenrelationships with targeted customers by differentiating itselffrom competitors?

10. Fixed costs:
A) may be either direct or indirect costs.
B) vary with production or sales volume.
C) include parts and materials used to manufacture a product.
D) can be adjusted in the short run to meet actual demands.

11. Which of the following describes a variable cost?
A) Variable cost are always indirect costs.
B) Variable costs increase in total when the actual level ofactivity increases.
C) Variable costs include most personnel costs and depreciation onmachinery.
D) Variable costs can always be traced directly to the costobject.

12. Cost-volume-profit analysis is used PRIMARILY bymanagement:
A) as a planning tool.
B) for control purposes.
C) to establish a target net income for next year.
D) to attain extremely accurate financial results.

13. The break-even point is the level at which revenues:
A) equal fixed costs.
B) equal variable costs.
C) equal fixed costs minus flexible costs.
D) equal variable costs plus fixed costs.

14. Cost-volume-profit analysis assumes all of the followingEXCEPT:
A) all costs are purely variable or fixed.
B) units manufactured equal units sold.
C) total variable costs remain the same over the relevantrange.
D) total fixed costs remain the same over the relevant range.

DANCEST 805 Lecture Notes - Lecture 15: Service Design, Production Planning, Human Factors And Ergonomics

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