 Click on the Image to Subscribe to Our YouTube! The average cost method is an inventory valuation method used in accounting to calculate the value of inventory. Put very simply it is the cost of all inventory items summed and averaged.
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 Click on the Photo to Subscribe on YouTube! Inventory valuation can make or break a company. It is absolutely essential that the valuation method you choose aligns with the needs of your specific business and the industry it serves. In this post we will introduce one valuation type known as actual cost valuation.
Have you ever wondered, what does the word anticipation mean? In this lecture, we will answer the question, what is anticipation inventory?
The Affinity Diagram is a powerful tool to use during projects with team members. It is an analytical tool that teams can use to organize ideas into subgroups with a common theme or relationship. The affinity diagram can help you see correlation in large amounts of data/information.
 Click on the photo to learn more about our services. Active Inventory is inventory that is to be used or sold within a defined period. Such as a specific accounting year.
 Click on the photo above to see Lean Strategies International LLC's Services. The nomogram is a computational aid which consists of two or more scales which are drawn and arranged so that results of calculations may be found by the linear connection points. The graph usually contains three parallel scales graduated for different variables so that when a straight line connects each value of any two, that value can be read directly from the third at the point of intersection. Also Called: Alignment Chart  ABC classification or ABC analysis is a technique used in materials management. The ABC represents the different categories of inventory in your system and indicates the level of control each category requires. The Apics Dictionary defines the categories of the ABC system as:
It is important to note that there is no fixed numbers for each category. Each organization should customize their classification system based on a pareto analysis. Discussion:
 When calculating Takt time you will need to know the available time. The available time is the total amount of time available minus breaks, lunch and planned downtime. The action plan is an effective way to track tasks given throughout events or projects. The action plan captures the action number, action items, action owners and the dates of the actions. The action plan is often used when documenting and tracking project actions.
 Assets is an accounting term that is used for items and resources that a company already owns. The term is used on a balance sheet to classify these items. Assets on hand are not the same as liabilities. The APICS Dictionary defines the term Assets as:
An Accounting/Financial term (balance sheet classification of accounts) representing resources owned by a company, whether tangible (cash, inventories) or intangible (patent, goodwill). These may have short term time horizon - such as cash, accounts receivable, and inventory- or a long term value (such as equipments, land, and buildings).  The name A3 is actually a reference to the size of paper the report is placed on. This report collects all key pieces of information and allows users to review all elements of improvement events, kaizen events and initiatives on one piece of paper. From a philosophical standpoint A3 refers to a thinking process used by many lean and six sigma practitioners for solving problems or taking advantage of opportunities. The thought process is outlined shown on the A3 and helps users establish a standard method of thinking while indirectly creating a familiar language and method of thinking amongst people. To learn more about A3 thinking visit a recent post in our blog Listen to the Gemba titled The Size of your brain matters not, A3 will fit! What is your experience?
Have you used an A3 document in an improvement event before? If so, we would love to here what your experience was like.
 In both lean and six sigma it is important to understand all aspects of waste, including inventory. One form of inventory is anticipation inventory. Anticipation inventory is built according to "anticipated" or some future demand. It is additional inventory that is created above and beyond the actual demand of customers according to forecasts, projections or trends. Some examples of anticipation inventory might be:
Reference: Apics Dictionary 14'th edition.  Assemble-To-Order describes a production environment in which a good or service can be assembled after receipt of a customer’s order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.
Synonyms for Assemble-To-Order include Finish-To-Order and Make-To-Order. Reference: Supply Chain Insights - Assemble to Order  The term Anova in six sigma stands for analysis of variation. Anova is a form of hypothesis testing which helps determine the differences if there is any between the two samples of data. If the samples mean / averages turn out to be equal to one another they are denoted as "null hypothesis." If the samples have different values, it will be noted in the results which are measured by "confidence level."
 Click on the photo to visit our training page. Andon is a japanese term that refers to a system of notification which is widely used today. The system provides management, maintenance or other employees of a quality issue, line stop or process problem. The andon system utilizes sensory notifications to alert others of a problem and more importantly the need for support. The alerts are are normally activated manually by a worker who observes the issue or by automated means that senses an abnormality somewhere in the process.
 Actual measurements are the measurements as they exist in fact. They are real measurements that are accompanied by objective evidence.
Example Samantha went to the store to buy Michelle her favorite popsicles while she was sick. Michelle asked Samantha how much money she would need. Samantha answered "about $5.00." After Samantha went to the store, Michelle asked for the change and the receipt. The receipt showed the popsicles were $3.50 and the change was $1.50. What two amounts are considered "actual" amounts? **Place answers in comments below**  Activity based costing (ABC) is a system used in accounting that identifies costs based on activities performed. The system then uses the drivers of cost (indirect and direct) to allocate or reserve costs to products, projects, customers or other segments. The system attempts to allocate costs like overhead on a more accurate basis than simply assigning direct labor or machine hours which may change from product to product.
 Jidoka is a term that describes one of the key pillars of the Toyota Production System. Sakichi Toyoda first invented Jidoka or Autonomation back in the mid 1890's. He created a stop so that when a broken thread occurred the machine would detect the abnormality and stop the loom from spinning, saving material. The phrase jidoka can be defined as "automation" with a human touch. The automation of machines gives operators the unique ability to run more than one machine while ensuring if anything goes wrong the machine will stop giving someone an opportunity to remove the cause and contain the abnormality. There are four critical stages involved in Jidoka:
1. Detect the abnormality. 2. Contain or stop the abnormality. 3. Fix the abnormality. 4. Solve the root cause and ensure it does not happen again. |
