Tag: System

  • PPC under different production systems: Process, Job, Intermittent, and Assembly Production Industry

    PPC under different production systems: Process, Job, Intermittent, and Assembly Production Industry

    PPC (production planning and control) under different production systems: Process, Job, Intermittent, and Assembly Production Industry…No single system of production planning and control is good for all types of industries. The nature of PPC varies from firm to firm depending upon the type of production process. In the manufacturing industry, raw materials are covered into components, semi-finished products, and finished products. But some firms are engaged in the assembling of products. An assembling industry combines several components or parts to make the finished product, e.g. bicycle, typewriter, fan, scooter, etc.

    The application of production planning and control to various types of products has been explained below:

    PPC in Process Production Industry:

    Production planning and control in the process industry are relatively simple. Routing is almost automatic and uniform because standardized techniques and specialized equipment are used in production processes. The product is standardized and goods are produced for stock. Therefore, scheduling is easy and department schedules can be prepared from the master schedule continuingly.

    Dispatching involves repetitive orders issued to ensure a steady flow of materials through the plant. In the process industry, decentralized dispatching can be used so that each foreman can issue orders and instructions to each operator and machine under his charge as per the circumstances of his work-station.

    The sequence of operations being uniform, responsibility for quality control can be delegated to individual production units to ensure that the products manufactured conform to the specifications laid down in advance. Thus, the main task of production planning and control in the process industry is the maintain a continuous and uniform flow of work at the predetermined rate so that there is full utilization of plant capacity and the work is completed in time. Therefore, it is known as “flow control”.

    PPC in Job Production Industry:

    Production planning and control are relatively difficult in the job production industry. Every order is of a different type and it entails a particular sequence of operations. There is not a standardized route plan and a new route has to be prepared for every order. Specific orders are assigned to different workstations according to the capacities available with them.

    Production, schedules are drawn up according to relative urgency of the order. An order received later may have to be supplied earlier. Sometimes, it may not be possible to schedule all operations relating to order simultaneously. Dispatching and follow up are also order-oriented. For every order fresh instructions and follow up measures have to be undertaken. Therefore, production control is job production system may be called “Order control”.

    PPC in Intermittent Production Industry:

    In the case of intermittent production, raw materials are converted into components or parts for stock but they are combined according to the customer’s orders. The products are manufactured usually in large batches. Every batch differs from others but all units within a batch are identical. Several heterogeneous finished products are manufactured within a limited range of options.

    Therefore, production planning and control in intermittent manufacturing is a mixture of those used in the process industry and job order production. There is a standardized component and production schedules are continuous. But the routes and schedules for intermediate operations have to be changed every time. To avoid delays and bottlenecks in the production process, great care needs to be taken in dispatching.

    Before issuing orders and instructions need for new materials and tools, overloading and underloading of particular machines/operators and other problems must be anticipated. As the product is diversified and several orders are being handled simultaneously in different work-centers, follow up is a cumbersome task in intermittent manufacturing. Follow up may be organized either according to product or process. Follow up by-product is suitable for process or continuous production system.

    Extra knowledge:

    It is relatively simple because there is an automatic flow of work from one operation to another and the follow-up mart has simply to report and remove breakdown, delays, shortage of materials and tools that obstruct the smooth flow of production. But in the intermittent production system, follow up by process is used. In every department, the follow-up men check the progress of work passing through that department. The follow-up men do not require knowledge and information about all the departments.

    But they have to be more alert as the flow of work from one operation to another is not automatic. Quality has to be controlled both during the manufacture of components and during their conversion into the finished product. In practice, a combination of flow and order controls known as block control may be used. Flow control is employed to produce standardized components and order control is used for the manufacture of finished products.

    PPC in Assembly Production Industry:

    In an assembly industry, there is a uniform sequence of repetitive operations but the number of components and their proportion to be assembled differ from one product to another. Once the sequence of operations has been decided, the efficiency depends upon the regular and timely supply of the required components.

    The entire production line may be held up and machinery and men may remain idle on account of the non-availability of one single component at the proper time and in the required quantity. It is, therefore, essential to determine first of all the type and quantity of various components required at different stages in the assembling of a product. This will depend upon the nature and volume of a product to be assembled during a particular period.

    Production schedules are drawn up for each product to achieve the targets of production. Assembly work for different products is assigned to various machines and operators according to their capacities and suitability. Instructions are issued in such a manner that the responsibility, for a particular product is fixed on specific employees. Follow up measures need to be taken to ensure that every product is being assembled as per the specifications and schedules laid down in advance.

  • Political Environment: Legislature, Executive, and Judiciary

    Political Environment: Legislature, Executive, and Judiciary

    The influence of the political environment of business is enormous. This article explains the topic of the International political environment and system: with their important concepts; Legislature, Executive, and Judiciary. The political system prevailing in a country decides, promotes, fosters encourages, shelters, directs and controls the business activities of those countries. Political Environment is the relationship between the state government and institutions legislation public and private in the Business environment.

    International political environment and system: with their important concepts; Legislature, Executive, and Judiciary.

    A political system that is stable, honest, efficient and dynamic and which ensures political participation of the people, and assures personal security to the citizens, is the primary factor for the growth of any business. Two basic political philosophies are in existence all over the world, viz., democracy and totalitarianism.

    In its pure sense, democracy refers to a political arrangement in which supreme power vests in the people. Democracy may manifest itself in any of two fundamental manners. If each individual is given the right to rule and vote on every matter, the result is pure democracy which is not, however, workable in a complex society with a large constituency.

    Hence, the republican forms of the organization follow whereby the public, in a democratic manner, elect their representatives who do the ruling. In totalitarianism, also, call authoritarianism, individual freedom is completely subordinate to the power of authority of the state and concentrates in the hands of one person or in a small group that is not constitutionally accountable to the people.

    Societies ruled by a pressure clique – political, economy or military – or by a dictator plus most oligarchies and monarchies belong to this category. The doctrine of fascism and erstwhile Russian Communism is an example of totalitarianism.

    India is a democratic country. Our political system comprises three vital institutions:

    • Legislature.
    • Executive or government, and.
    • Judiciary.

    Now, explain each one:

    Legislature:

    Out of three, the legislature is the most powerful political institution vested with such powers as policy making, law-makings, budget approving, executive control and acting as a mirror of public opinion. The influence of the legislature on business is considerable. It decides such vital aspects as the type of business activities, the country should have, who should own them, what should be their size of the operation, what should happen to their earnings and other related factors.

    The legislature is the most powerful institution. The main powers are vesting in the legislature are; in today’s economies, particularly of developing countries like India, the relevance of a protective legal environment for Business assumes immense proportions as it is the very foundation of every investment decision.

    The business has to be within the law of the Land. Every aspect of the business from its birth till death covers under the laws to ensure that not only profit is earned in a justified and fairway but also to ensure that in the attainment of business interests the interest of each person fully protect and the profits of the business are distributing in a manner beneficial to the society.

    Government as Executive:

    Also called the “state” the term government refers to “the center of the political authority having the power to govern those it serves”. For business consideration, we should know what are the government’s responsibilities to the business.

    Specifically, the executive or government’s responsibilities towards business are as follows:

    • Establishment and enforcement of the law.
    • Maintenance of order.
    • Money and credit.
    • Orderly growth.
    • Infrastructure.
    • Information.
    • Assistance to small industries.
    • Transfer of technology, and.
    • Tariffs and Quotas.
    More things:

    The Government or executive is the executory body of the laws which are framed by the legislature.

    According to E. V. Schneider,

    “Government is that institution by which men everywhere, seek to order society, that is, to control the structure and functioning of society.”

    According to Musselman and Hughes,

    “Government is the center of the political authority having the power to govern those it serves.”

    In simple words, the role of the Government or executive is to shape, direct and control the business activities. The translations of the objective of any laws to the reality depend as much upon the law itself as on its implementation. The implementation of the law in its word and spirit only can ensure the realization of its true objectives.

    Indian constitution provides for a federal set up with powers being divided between central and state governments. The powers and functions of central and state governments are described in the constitution.

    Judiciary:

    The third political institution is the judiciary. Judiciary determines how the work of executives has been fulfilled. It settles the relationship between private citizens, on one hand, and between citizens and the government upon the other. The judiciary sees to it that the exercise of authority by the executives is according to the general rules laid down by the legislature, it may declare that any particular order issued is, in fact, ultra vires (beyond the authority). It is the power of the Judiciary to settle legal disputes that affect business considerably.

    1) Disputes between employers and employees, 2) employer and employer, 3) employee and employee, 4) employers and the public, and 5) employers and the government.

    The power of the judiciary is of the dual type:

    • The authority of the courts to settle legal disputes, and.
    • Judicial review – the authority of the courts to rule on the constitutionality of legislation.

    What is the International political environment?

    Introduction: The political environment of the country of operation becomes increasingly important for the international firm. As it moves from exports to foreign direct investment (FDI) as the mode of international market entry. Exporting firms use political pressure tactics to have free exportability of the products in their home country regulations, hassle-free procedures, and legislative requirements and export incentives.

    Besides, diplomatic channels are utilizing to get improve market access for imported goods in the target foreign country markets, reduced import tariffs, compatible quality regulations, etc. The dispute settlement mechanism, legal framework, and judicial independence are also critical to fair treatment expecting in international business. Cordial political relations between the firm’s home country and the host countries have a direct favorable impact on FDIs.

    More things:

    As a firm expands internationally and begins to operate in multiple countries, political and legal issues become increasingly complex. Consequent to economic liberalization in the People’s Republic of China, multi­level marketing firms, such as Amway, Avon, Tupperware, and Mary Kay Cosmetics grew rapidly. By 1997, Amway had approximately 80,000 sales representatives who generated $178 million in sales. Whereas Avon had nearly 50,000 representatives who generated sales of $75 million.

    It was reported that some other companies using the so-called pyramid schemes were cheating consumers. Consequently, the Chinese government banned direct selling in April 1998. As a result, direct marketing companies were prohibited to operate their business model in China. It was only after diplomatic pressures and negotiations between the US and the Chinese governments that the policy was reversed. The firm-level economic and political interests of the home and the host countries may differ widely.

    International managers need to understand the significance of political decision-making in the host country that may severely influence its overseas operations. International business relations between the firms are greatly affecting “affinity” or “animosity” among the countries based on historical or political reality. For instance, India’s political affinity with Sri Lanka and Mauritius has led to a high level of trade and investment whereas the reverse situation exists in the case of Indo-Pak trade.

    Political Environment Legislature Executive and Judiciary
    Political Environment: Legislature, Executive, and Judiciary, #Pixabay.

    International Political Systems and Ideologies:

    International political and economic systems or environments hardly function independently. The two are mutually inter-dependent. Political and diplomatic relations between the two counties greatly influence their economic relations. The political system of a country comprises various stakeholders. Such as the government, political parties with different ideologies, labor unions, religious organizations, environmental activists, and various NGOs.

    Each of these players in a political system has its own unique sets of beliefs and aspirations and exerts its influence upon political decisions. The acquisition, development, securing, and use of power about other entities. Where did power view as the capacity of the social actors to overcome the resistance of the other actors are term as political behavior? Ideology is a set of beliefs or ideas as to how the society or group should organize, politically, economically, or morally.

    More knowledge:

    Political ideology is a set of ideas or beliefs. That people hold about their political regime and its institutions about their position and role in it. Ideologies of different groups or political parties are often conflicting and they keep on challenging each other. In democratic countries, such as India, the US, and the UK, the shift in the political parties and their ideologies puts pressure on business operations of foreign firms. The power exerted by different pressure groups also varies from country to country.

    For instance, communist or socialist parties in countries, such as Russia and China hardly face any considerable challenge whereas such parties exert sizeable political pressure in countries like India, Sweden, Italy, and Greece. On the other hand; these parties hardly have any political viability in the US. Most religious organizations are politically neutral in India. Whereas the Catholic Church played a crucial role in overthrowing Ferdinand Marcos in the Philippines and the liberation of Poland from Soviet domination. Islamic religious leaders in Iran greatly influence political decision making.

  • Economic System: Capitalism, Socialism, and Communism

    Economic System: Capitalism, Socialism, and Communism

    The economic system divides into three groups; capitalism, socialism, and communism. The scope of private business and the extent of government regulation of economic activities depend to a very large extent on the nature of the economic system, which is an important part of the business environment.

    This article explains about the Economic System and their points: Capitalism, Socialism, and Communism.

    What is the economic system? An economic system or economic order is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes and patterns of consumption. That comprises the economic structure of a given community.

    As such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce and in what quantities and who receives the output of production.

    Economic System Capitalism Socialism and Communism
    Economic System: Capitalism, Socialism, and Communism

    Broadly the economic system is divided into three groups.

    1. Capitalism.
    2. Socialism, and.
    3. Communism.

    Now, explain each one;

    Capitalism:

    What is Capitalism? Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets.

    The system of capitalism stresses the philosophy of individualism believing in private ownership of all agents of production, in the private sharing of distribution processes. That determines the functions rewards of each participant and individual expression of consumer choice through a free market place.

    In its political manifestation, capitalism may fall in a range between extreme individualism and anarchism (no government) and the acceptance of some state sanctions. The capitalist system also knows as a free enterprise economy and market economy.

    Two types of capitalism may be distinguished, viz.,

    • The old, Laissez-fair capitalism, where government intervention in the economy is absent or negligible, and.
    • The modern, regulated or mixed capitalism, where there is a substantial amount of government intervention.

    Socialism:

    Under socialism, the tools of production are to organize, managed and owned by the government, with the benefits occurring to the public. A strong public sector, agrarian reforms, control over private wealth and investment and national self-reliance are the other planks of socialism.

    What is Socialism? Socialism is a range of economic and social systems characterized by social ownership of the means of production and workers’ self-management. As well as the political theories and movements associated with them. Social ownership can be public, collective or cooperative ownership or citizen ownership of equity.

    Socialism does not involve an equal division of existing wealth among the people but advocates the egalitarian principle. It believes in employing all and emphasizes suitable rewards to the efforts put in by every worker. Also called Fabian socialism, this philosophy follows in our country and other social-democratic countries in the world.

    Communism:

    What is Communism? Communism, the political and economic doctrine that aims to replace private property and a profit-based economy with public ownership and communal control of at least the major means of production (e.g., mines, mills, and factories) and the natural resources of a society.

    In political and social sciences, communism is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society. Which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money, and the state.

    Communism is thus a form of socialism a higher and more advanced form, according to its advocates. Exactly how communism differs from socialism has long been a matter of debate, but the distinction rests largely on the communist’s adherence to the revolutionary socialism of Karl Marx.

    Communism goes further to abolish all private property and property rights to income. The state would own and direct all instruments of production. Sharing in the distributive process would have no relationship to the private property since this right would not exist. Alternatively called maxims, communism was followed in Russia, China, and East European Countries.

    Table of Compared: Capitalism, Socialism and Communism.

    Economic System Capitalism Socialism and Communism - Table of Compared
    Economic System: Capitalism, Socialism, and Communism – Table of Compared,
  • What are the Essentials of Effective Control System?

    What are the Essentials of Effective Control System?

    Essentials of Effective Control System; Control is necessary for every organization to ensure that everything is going properly. Every manager, therefore, should have an effective and adequate control system to assist him in making sure that events conform to plans. However, control does not work automatically, but it requires a certain design. While the basic, principles involved in designing a control system in organizations may be universal; the actual system in an organization requires some specific design.

    Here are explained; the Essentials of Effective Control System.

    Controls at every level focus on inputs, processes, and outputs. Control is a continuous process. It is an integral part of management. It’s a concern with monitoring and evaluating performance so as to obtain the best results from managerial efforts. It ensures work accomplishment according to plans. It’s also the process of guiding and supervising the events in the organization. What is the Importance of Controlling? with their Steps.

    Essentials of Effective Control System - List
    Essentials of Effective Control System – List:

    In this tailoring of the Control system, there are certain requirements, which should keep in mind.

    Reflection Organizational Needs:

    All control systems and techniques should reflect the jobs they are to perform. There may be several control techniques, which have general applicability, such as, budgeting, costing, etc. However, it should not assume that these might utilize in all situations. The managers should choose an appropriate tool for control, which helps him in controlling actions according to plans.

    Forward-Looking:

    Control should be forward-looking. Though many of the controls are instantaneous, they must focus attention as to how future actions can be confirmed with plans. In fact, the control system should be such that it provides aid in the planning process. This is done in two ways: it draws situations where new planning is needed, and it provides some of the data upon which plans can base.

    Promptness in Reporting Deviation:

    The success of a thermostat lies in the fact that it points the deviation promptly and takes corrective actions immediately. Similarly, an ideal control system detects deviations promptly arid informs the manager concerned to take timely actions. This is done by designing good appraisal and information systems.

    Pointing out Exceptions at Critical Points:

    Control should point exception at critical points and suggest whether an action is to take for deviations or not Some deviations in the organizations have any impact while others, though very little in quantity may have great significance. Thus, the control system should provide information for critical point control and control on exception.

    The critical point control stresses that effective control requires attention to those factors critical to appraising performance against an individual plan. The control on exception requires that a manager should take corrective action when there is an exceptional deviation. The more a manager concentrates his control efforts on exceptions, the more efficient will be the results of his control.

    Objectives:

    The control should be objective, definite, and determinable in a clear and positive way. The standards of measurement should quantify as far as possible. If they are not quantifiable, such as training effectiveness, etc. they must be determinable and verifiable. If the performance standard and measurement is not easily determinable, many subjective elements enter into the process, which catches the controller and controlled on wrong tooting.

    Flexible:

    Control system should be flexible so that it remains workable in the case of changed plans, unforeseen circumstances, or outright failures. As Geotz has remarked, a control system should report such failures and should contain sufficient elements of flexibility to maintain managerial control of operations despite such failures. Having alternative plans for various probable situations can provide much flexibility in control. In fact, flexible control is normally achieving through flexible plans.

    Economical:

    Control should be economical and must be worth its costs. The economy is relative since the benefits vary with the importance of the activity the size of the operation, the expense that might incur in the absence of control and the contribution the control system can make. The economy of a control system will depend a great deal on the manager’s selecting for control only critical factors in areas important to him.

    If tailored to the job and the size of the enterprise, control will be economical. A large-sized organization can afford highly complicated techniques, sophisticated tools of control and a more elaborate system of control, but a small-sized organization cannot afford these because of the cost factor.

    Simple:

    Control system must be simple and understandable so that all managers can use it effectively. Control techniques which are complicated such as complex mathematical formulae, charts, graphs, advanced statistical methods, and other techniques fail to communicate the meaning of their control data to the managers who use them. Effective control requires consistency with the position, operational responsibility, ability to understand, and needs of the individuals concerned.

    What are the Essentials of Effective Control System - Browser
    What are the Essentials of Effective Control System? Browser #Pixabay.

    Motivating:

    Control system should motivate both controller and controlled. While the planning and control are necessary for economical operations, researches in human relations show that planning and control are, more often than not, antagonistic to good human relations.

    Sometimes, they may even tend to deprive the people in the organizations one of man’s basic needs – a sense of powerful and worthwhile accomplishment The design of control system should be such that aims at motivating people by fulfilling their needs.

    Reflection Organizational Pattern:

    The control should reflect organizational pattern by focusing attention on positions in organization structure through which deviations are correct. Organization structure, a principal vehicle for coordinating the work of people, is also a major means of maintaining control.

    Thus, in every area of control, it is not enough to know that things are going wrong unless it is known wherein the organization structure the deviations are occurring. This enables managers to fix up the responsibility and to take corrective actions.

  • Why we Comparison of Different Production Systems?

    Why we Comparison of Different Production Systems?

    Comparison of Different Production Systems; The system relies on a number of important factors like policies of the organization, Types of Production Systems, size of production, etc. However, production methods, organization, activities, and operations differ from company to company. The production system can classify in the following ways: 1) Continuous or Flow Production, and 2) Intermittent Production System.

    Here are explain; How to Comparison of Different Production Systems?

    As we have discussed various systems and sub-systems in detail in the above lines, we can now make a comparative study of them as follows;

    Comparison of Different Production Systems Chat
    Comparison of Different Production Systems Chat

    Manufacturing Cost:

    Cost of production per unit is the lowest in-process production while it is highest in job production because large scale continuous production is carried out under process production. Per unit, the cost is maximum in Job production and minimum in-process production. The four methods of production in increasing order of costs can arrange as process, mass, batch, and job. Unit cost in mass production is higher than the process production while it is lower than the batch production or job production.

    Size and Capital Investment:

    As stated earlier, the scale of operation is small in job production, medium in batch production, large in mass production and very large in-process production. Hence the size of capital investment differs from system to system. Process production calls for higher investment while mass production requires a lesser amount of capital investment. It is lower in case of job production and comparatively higher in batch production. Extra explain each of them;

    1. Capital Investment: The requirement of capital varies according to the nature of the product and the input needs. The systems in ascending order of capital investment can be arranged as a job, batch, mass, and process.
    2. Size of Plant: In job and batch system the same equipment/machine can perform a number of operations to manufacture different type of items. So the size of the plant is likely to smaller than those for mass and process system where the whole production process is to strictly arrange in a predetermined sequence of operations.

    Flexibility in Production:

    In case of a change in demand for the product, the production facilities may adjust very shortly without increasing much expenses under the system of job or batch production. But both the sub-systems of continuous production system i.e., mass production or process production employ single-purpose machine in their manufacturing processes. Job and batch systems can easily adjust to changes in the requirement of the consumer with incurring any heavy expenditure.

    But in the case of mass and process systems we can produce one single product and with the change in demand of products the systems cannot adjust easily. Thus job-batch system using general-purpose machines is more flexible than a mass-process system using single-purpose machines. They cannot adjust their production facilities so quickly and easily as is possible in job or batch production where general-purpose machines are using.

    Required Technical Ability:

    Both job and batch production requires high skilled technical foreman and other executives. Highly skills labor is required in job and batch production to operate and carry out specializes work on machines. In the case of mass and process systems, semi-skilled persons can also operate the machines.

    But due to the large scale of production, more managerial skill is requiring in continuous systems. Under mass production for process production systems, managerial ability plays an important role because it requires the higher ability for planning and coordinating several functions in mass and process production than in the case of job and batch production.

    Organizational Structure:

    A mostly functional organization is adopting in case of job and batch production systems. In job and batch production generally functional organizational approach is adopting whereas divisional organization pattern is using in mass and process systems.

    There is decentralization concept in organization of job and batch whereas centralization is prominent in mass and process systems. On the other hand, the divisional organization is preferred in mass and product process production systems due to the greater emphasis for centralization.

    Job Security:

    Job and batch systems of production do not provide. Any type of job security to workers due to their intermittent character. During odd times, workers particularly upskilling workers are thrown out of a job. On the contrary, mass and process production systems provide greater job security to workers. Because production operations are carrying out continuously in anticipation of stable and continuous demand of the product.

    Job and batch systems produce items only when orders are receiving. During slack periods when there is no or very little demand workers are likely to sack. Job security is the probability that an individual will keep his/her job; a job with a high level of job security is such that a person with the job would have a small chance of losing it. Thus, there is less job security in Job-batch production systems. In mass and process system, items are manufacturing for stock and so production is continuous. Due to this, there is more job security for workers.

    Industrial Application:

    The application of different systems is suitable in different industries depending upon the nature of work. The mechanism of job production applies in products of construction and manufacturing industries like buildings, bridges, special purpose machines, etc.

    Batch production is mostly using in mechanical engineering and consumer-goods industries like cotton, jute, machine tools, shoe-making, etc. Mass production is found in automobiles, sugar refining, refrigerators, electrical goods, etc. Process production is most appropriate in chemical, petroleum, milk processing industries, etc.

    Why we Comparison of Different Production Systems - Toothbrush
    Why we Comparison of Different Production Systems? Toothbrush #Pixabay

    Thus, a comparative view of the different systems of production reveals. That no one system is suitable for all types of industries. And, therefore, each system is different in itself and must be studied with reference to the nature of the industry.

  • Types of Production Systems; Continuous System and Intermittent System

    Types of Production Systems; Continuous System and Intermittent System

    Types of Production Systems; A production manager will have to choose the most appropriate method for his enterprise. The final decision regarding any particular method of production is very much affecting by the nature of the products and the quantity to produce. The types of Production Systems are grouped under two categories viz., Intermittent production system, and Continuous production system.

    Here are explain Types of Production Systems; Continuous System and Intermittent System with their advantage and disadvantage.

    There are two main types of production systems: 1) Continuous System and 2) Intermittent System.

    Types of Production Systems Chart - Continuous and Intermittent
    Types of Production Systems Chart – Continuous and Intermittent

    Continuous System or Flow System:

    According to Buffa,

    “Continuous flow production situations are those where the facilities are standardized as to routings and flow since inputs are standardized. Therefore a standard set of processes and sequences of the process can adopt.”

    Thus continuous or flow production refers to the manufacturing of large quantities of a single or at most a very few varieties of products with a standard set of processes and sequences. The mass production is carried on continuously for stock in anticipation of demand.

    Types of Production Systems Continuous System and Intermittent System
    Types of Production Systems; Continuous System and Intermittent System, #Pixabay.

    Characteristics of Continuous System:

    The following characteristics below are;

    • The volume of output is generally large (mass production) and goods are produced in anticipation of demand.
    • The product design and the sequence of the operations are standardized i.e. identical products are produced.
    • Special purpose automatic machines are used to perform standardized operations.
    • Machine capacities are balanced so that materials are fed at one end of the process and the finished product is received at the other end.
    • Fixed path materials handling equipment is used due to the predetermined sequence of operations.
    • Product layout designed according to a separate line for each product is considered.

    Advantages of Continuous System:

    The following advantages below are;

    • The main advantage of the continuous system is that work-in-progress inventory is minimum.
    • The quality of output is kept uniform because each stage develops skill through repetition of work.
    • Any delay at any stage is automatically detected.
    • Handling of materials is reduced due to the set pattern of the production line. Mostly the materials are handled through conveyor belts, roller conveyors, pipelines, overhead cranes, etc.
    • Control over materials, cost, and output are simplified.
    • The work can be done by semi-skilled workers because of their specialization.

    The disadvantages of Continuous System:

    The continuous system, however, is very rigid and if there is a fault in one operation the entire process is disturbed. Due to continuous flow, it becomes necessary to avoid piling up of work or any blockage on the line. Unless the fault is cleared immediately, it will force the preceding as well as the subsequent stages to be stopped. Moreover, it is essential to maintain stand by equipment to meet any breakdowns resulting in production stoppages. Thus investments in machines are fairly high.

    Types of Continuous System:

    Continuous production is of the following types;

    Mass Production:

    This production refers to the manufacturing of standardized parts or components on a large scale. Mass production system offers economies of scale as the volume of output is large. Quality of products tends to be uniform and high due to standardization and mechanization. In a properly designed and equipped process, individual expertise plays a less prominent role.

    Process Production:

    Production is carried on continuously through a uniform and standardized sequence of operations. Highly sophisticated and automatic machines are used. Process production is employed in the bulk processing of certain materials. The typical processing Industries are fertilizers plants, petrochemical plants, and milk dairies which have highly automated systems and sophisticated controls.

    They are not labor-intensive and the worker is just an operator to monitor the system and take corrective steps if called for. On the basis of the nature of the production process, flow production may classify into Analytical and Synthetic Production.

    • Analytical Process: In the Analytical Process of production, the raw material is broken into different products e.g. crude oil is analyzed into gas, Naptha, petrol, etc. Similarly, coal is processed to obtain coke, coal gas, coal tar, etc.
    • Synthetic Process: Synthetic Process of production involves the mixing of two or more materials to manufacture a product, for instance, lauric acid, myristic acid, stearic acid are synthesized to manufacture soap.
    Assembly Lines:

    Assembly line a type of flow production which is developed in the automobile industry in the USA. A manufacturing unit prefers to develop and employ an assembly line because it helps to improve the efficiency of production. In an assembly line, each machine must directly receive material from the previous machine and pass it directly to the next machine.

    Machine and equipment should be arranged in such a manner that every operator has free and safe access to each machine. Space should be provided for free movement of forklifts, trucks, etc. which deliver materials and collect finished products.

    Intermittent System:

    According to Buffa,

    “Intermittent situations are those where the facilities must be flexible enough to handle a variety of products and sizes or where the basic nature of the activity imposes a change of important characteristics of the input (e.g. change. in the product design). In instances such as these, no single sequence pattern of operations is appropriate, so the relative location of the operation must be a compromise that is best for all inputs considered together.”

    In the industries following the intermittent production system, some components may be made for inventory but they are combined differently for different customers. The finished product is heterogenous but within a range of standardized options assembled by the producers. Since production is partly for stock and partly for consumer demand, there are problems to be met in scheduling, forecasting, control, and coordination.

    Characteristics of Intermittent System:

    The following characteristics below are;

    • The flow of production is intermittent, not continuous.
    • The volume of production is generally small.
    • A wide variety of products are produced.
    • General purpose, machines, and equipment are used so as to be adaptable to a wide variety of operations.
    • No single sequence of operations is used and periodical adjustments are made to suit different jobs or batches.
    • Process layout is most suited.

    The intermittent system is much more complex than continuous production because every product has to be treated differently under the constraint of limited resources.

    The intermittent system can be-effective in situations which satisfy the following conditions:

    • The production centers should be located in such a manner so that they can handle a wide range of inputs.
    • Transportation facilities between production centers should be flexible enough to accommodate a variety of routes for different inputs.
    • It should be provided with the necessary storage facility.

    Types of Intermittent System:

    Intermittent Production May be of two types;

    Job Production:

    Job or unit production involves the manufacturing of a single complete unit with the use of a group of operators and process as per the customer’s order. This is a “special order” type of production. Each job or product is different from the other and no repetition is involved. The product is usually costly and non-standardised.

    Customers do not make a demand for exactly the same product on a continuing basis and therefore production becomes intermittent. Each product is a class by itself and constitutes a separate job for the production process. Shipbuilding, electric power plant, dam construction, etc. are common examples of job production.

    Characteristics of Job Production:
    • The product manufactured is custom-made or non-standardised.
    • The volume of output is generally small.
    • Variable path materials handling equipment are used.
    • A wide range of general-purpose machines like grinders, drilling, press, shaper, etc. is used.
    Advantages of Job Production:

    It is flexible and can adapt easily to changes in product design. A fault in one operation does not result in complete stoppage of the process. Besides, it is cost-effective and time-effective since the nature of the operations in a group is similar. There is reduced material handling since machines are close in a cell. The waiting period between operations is also reduced. This also results in a reduced work-in-progress inventory.

    The disadvantages of Job Production:

    Job shop manufacturing is the most complex system of production e.g. in building a ship thousands of individual parts must be fabricated and assembled. A complex schedule of activities is required to ensure the smooth flow of work without any bottlenecks. Raw materials and work-in-progress inventories are high due to uneven and irregular flow of work. Workloads are unbalanced, speed of work is slow and unit costs are high.

    Batch Production:

    Batch production pertains to repetitive production. It refers to the production of goods, the quantity of which is known in advance. It is that form of production where identical products are produced in batches on the basis of demand of customers’ or of expected demand for products.

    This method is generally similar to job production except for the quantity of production. Instead of making one single product as in case of job production, a batch or group of products are produced at one time. It should be remembered here that one batch of products may not resemble with the next batch.

    It is defined as,

    “The manufacture of a product in small or large batches or lots at intervals by a series of operations, each operation being carried out on the whole batch before any subsequent operation is performed.”

    The batch production is a mixture of mass production and job production. Under it machines turn out different products at intervals, each product being produced for a comparatively short time using mass-production methods. Both job production and batch production are similar in nature, except that in batch production the quantity of product manufactured is comparatively large.

    Advantages of Batch Production:

    The batch production method possesses the following advantages;

    • The work is of a repetitive nature.
    • There is a functional layout of various manufacturing processes.
    • One operation is carried out on the whole batch and then is passed on to the next operation and so on.
    • The same type of machines is arranged at one place.
    • It is generally chosen where trade is seasonal or there is a need to produce a great variety of goods.
    The disadvantages of Batch Production:

    Work-in-progress inventory is high and large storage space is required. Due to frequent changes in product design, no standard sequence of operation can be used. Machine set-ups and tooling arrangements have to be changed frequently. The main problem in batch production is the idle time between one operation and the other. The work has to wait until a particular operation is carried out on the whole batch.

  • Production System Introduction Meaning Definition and Elements

    Production System Introduction Meaning Definition and Elements

    What does mean Production System? Introduction; A system is a logical arrangement of components designed to achieve particular objectives according to a plan. A system may have many components and variation in one component is likely to affect the other components of the system e.g. change in the rate of production will affect inventory, overtime hours, etc. A production system is a computer program typically used to provide some form of artificial intelligence. Which consists primarily of a set of rules about behavior but it also includes the mechanism necessary to follow those rules as the system responds to states of the world.

    Here are explain Production System; Introduction, Meaning, Definition, and Elements.

    The production system is the framework within which the production activities of an organization are carrying out. At one end of the system are inputs and at the other end output. Input and output are linking by certain processes or operations or activities imparting value to the inputs. These processes, operations, or activities may call production systems. Also, The nature of the production system may differ from company to company or from plant to plant in the same firm.

    Meaning of Production System:

    The production system is an industrial system that supports manufacturing and logistics. They also involve flows of raw materials, equipment, and event information, as there’s usually paperwork involved. Also, The limits on a production system include its capacity and the quality of the finished product. You may need to know What is the Production Management?

    Meaning of Production:

    Production can explain as an act of either manufacturing or mining or growing of goods (commodities) generally in bulk for trade. Production is a method employing for making or providing essential goods and services for consumers.

    It is a process that puts intangible inputs like ideas, creativity, research, knowledge, wisdom, etc. in use or action. Also, It is a way that transforms (convert) tangible inputs like raw materials, semi-finished goods, and unassembled goods into finished goods or commodities.

    Meaning of System:

    The system is an arrangement or assembly of inter-dependent processes (activities) that are based on some logic and function. Also, It operates as a whole and is designing (build) intending to achieve (fulfill) some objective or do some work. Huge systems are often a collection (assembly) of smaller sub-systems.

    Definition of Production System:

    They may define as,

    “The methods, procedure or arrangement which includes all functions required to accumulate (gather) the inputs, process or reprocess the inputs, and deliver the marketable output (goods).”

    According to Webster,

    “System is a regularly interacting inter-dependent group of items forming a unified whole.”

    The production system utilizes materials, funds, infrastructure, and labor to produce the required output in the form of goods. Also, Do you know what is the History of Production Management?

    Production System Introduction Meaning Definition and Elements
    Production System; Introduction, Meaning, Definition, and Elements. Asia Pottery circle clay #Pixabay.

    Elements of Production System:

    The following elements are below;

    • Inputs: Inputs are the physical and human resources utilized in the production process. Also, They consist of raw materials, parts, capital equipment, human efforts, etc.
    • Conversion Process: It refers to a series of operations that are performing on materials and parts. Operations may be either manual or mechanical or chemical. Also, Operations convert inputs into output. The conversion process also includes supporting activities, which help the process of conversion. The supporting activities include; production planning and control, purchase of raw materials, receipt, storage and issue of materials, an inspection of parts and work-in-progress, testing of products, quality control, warehousing of finished products, etc.
    • Outputs: Outputs are the products or completed parts resulting from the conversion process. The output generates revenue.
    • Storage: Storage takes place after the receipt of inputs, between one operation and the other, and after the output.
    • Transportation: Inputs are transporting from one operation to another in the production process.
    • Information: It provides system control through measurement, comparison, feedback, and corrective action.

    Hence, we can say that the production system is a union or combination of its three main components viz., Inputs, Conversion Process, and Output. In short, everything which is done to produce goods and services or to achieve the production objective is called a production system.

  • Advantages and disadvantages of Expert Systems

    An expert system is a computer program that designs to emulate and mimic human intelligence, skills, or behavior. An expert system an advanced computer application that implements to provide solutions to complex problems or to clarify uncertainties through the use of non-algorithmic programs where normally human expertise will need. Advantages and disadvantages of Expert Systems; They design to solve complex problems by reasoning through bodies of knowledge, represented mainly as if-then rules rather than through conventional procedural code. Expert systems are most common in the complex problem domain and consider as widely use alternatives in searching for solutions that require the existence of specific human expertise.

    Here explain the advantages and disadvantages of expert systems.

    Expert systems are most common in the complex problem domain and consider as widely use alternatives in searching for solutions that require the existence of specific human expertise. The expert system is also able to justify its provided solutions based on the knowledge and data from past users. Normally expert systems use in making business marketing strategic decisions, analyzing the performance of real-time systems, configuring computers, and perform many other functions that normally would require the existence of human expertise.

    The difference between an expert system with a normal problem-solving system is that the latter is a system where both programs and data structures encode; while for an expert system only the data structures hard-coded and no problem-specific information encodes in the program structure. Instead, the knowledge of human expertise capture and codify in a process known as knowledge engineering.

    Hence, whenever a particular problem requires the assistance of certain human expertise to provide a solution; the human expertise which has been codified will use and process to provide a rational and logical solution. This knowledge-based expert system enables the system to frequently add new knowledge; and, adapt accordingly to meet new requirements from the ever-changing and unpredictable environment.

    Advantages of Using Expert System:

    An expert system has been reliably used in the business world to gain tactical advantages and forecast the market’s condition. In this globalization era where every decision made in the business world is critical for success; the assistance provided from an expert system is undoubtedly essential and highly reliable for an organization to succeed.

    Examples given below will be the advantages for the implementation of an expert system in business:

    1] Providing consistent solutions:

    It can provide consistent answers for repetitive decisions, processes, and tasks. As long as the rule base in the system remains the same, regardless of how many times similar problems are being tested, the conclusions drawn will remain the same.

    2] Provides reasonable explanations:

    It can clarify the reasons why the conclusion was drawn and be why it considers as the most logical choice among other alternatives. If there are any doubts in concluding a certain problem; it will prompt some questions for users to answer to process the logical conclusion.

    3] Overcome human limitations:

    It does not have human limitations and can work around the clock continuously. Users will be able to frequently use it in seeking solutions. The knowledge of experts is an invaluable asset for the company. It can store the knowledge and use it as long as the organization needs it.

    4] Easy to adapt to new conditions:

    Unlike humans who often have trouble adapting to new environments, an expert system has high adaptability and can meet new requirements in a short period. It also can capture new knowledge from an expert and use it as inference rules to solve new problems.

    Disadvantages of Using Expert System:

    Although the expert system does provide many significant advantages, it does have its drawbacks as well.

    Examples given below will be the disadvantages for the implementation of an expert system in business:

    1] Lacks common sense:

    It lacks common sense needed in some decision making since all the decisions made base on the inference rules set in the system. It also cannot make creative and innovative responses as human experts would in unusual circumstances.

    2] High implementation and maintenance cost:

    The implementation of an expert system in business will be a financial burden for smaller organizations since it has high development costs as well as the subsequent recurring costs to upgrade the system to adapt to the new environment.

    3] Difficulty in creating inference rules:

    Domain experts will not be able to always explain their logic and reasoning needed for the knowledge engineering process. Hence, the task of codifying out knowledge is highly complex and may require high

    4] May provide wrong solutions:

    It is not error-free. There may error occur in the processing due to some logical mistakes made in the knowledge base, which will then provide the wrong solutions.

    Advantages and disadvantages of Expert Systems Image
    Advantages and disadvantages of Expert Systems, Image from Pixabay.

    Classified as Expert System:

    A good expert system expects to grow as it learns from user feedback. Feedback incorporates into the knowledge base as appropriate to make the expert system smarter. The dynamism of the application environment for expert systems base on the individual dynamism of the components.

    This can classify as follows:

    Most dynamic:

    Working memory. The contents of the working memory, sometimes called the data structure, changes with each problem situation. Consequently, it is the most dynamic-component of an expert system, assuming, of course, that it keeps current.

    Knowledgebase:

    The knowledge base need not change unless a new piece of information arises that indicates a change in the problem-solving procedure. Changes in the knowledge base should carefully evaluate before being implemented. In effect, changes should not be based on just one consultation experience. For example, a rule that is found to be irrelevant less than one problem situation may turn out to be crucial in solving other problems.

    Least dynamic:

    Inference engine. Because of the strict control and coding structure of an inference engine, changes make only if necessary to correct a bug or enhance the inferential process. Commercial inference engines, in particular, change only at the discretion of the developer. Since frequent updates can be disruptive and costly to clients, most commercial software developers try to minimize the frequency of updates.

  • Meaning, Definition, Services, and Functions of Financial System

    Meaning, Definition, Services, and Functions of Financial System

    A financial system is a network of financial institutions, financial markets, financial instruments, and financial services that facilitate money transfer. This system includes end users of saver, arbitrator, device, and money. The level of economic development depends largely on the basis and it facilitates the economy of the prevailing financial system. Proper circulation of funds is necessary for the economic development of the country. Do you study to learn: If Yes? Then read the lot. Let’s Study Meaning, Definition, Services, and Functions of Financial System. Read this in the Hindi language: वित्तीय प्रणाली का अर्थ, परिभाषा, सेवाएं, और कार्य। 

    The concept of Financial System Discussing the topic: Meaning, Definition, Services, and Functions of Financial System.

    Use of effective circulation and wealth promotes industrial development of the country, which supports economic development. If money is not transmitted effectively in the economy, money will be seized, which will negatively affect economic development, in which the establishment and development of industries can be blocked.

    Effective circulation, effective use of money is equally important. Economic development cannot be possible if the circulated wealth is not used properly in the producing areas. The financial system helps in spreading the wealth in the economy.

    #Meaning of Financial System:

    The financial system refers to set of complex and interconnected components consisting specialized and non-specialized financial institutions, organized and unorganized financial markets, financial instruments and financial services. The aim of the financial system is to facilitate the circulation of funds in an economy.

    It is concerned about money, credit, and finance. Money refers to the medium of exchange or mode of payment. Credit refers to the amount of debt which is returned along with the interest. And the finance refers to the monetary resources comprising the own funds and debts of the state, company or a person.

    The efficient financial system and sustainable economic growth are corollaries. The financial system mobilizes the savings and channelizes them into productive activity and thus influences the pace of economic development. Economic growth is hampered for want of an effective financial system. Broadly speaking, financial system deals with three inter-related and interdependent variables, i.e., money, credit, and finance.

    #Definition of Financial System:

    According to Amit Chaudhary,

    “Financial system is the integrated form of financial institutions, financial markets, financial securities, and financial services which aim is to circulate the funds in an economy for economic growth.”

    According to Dhanilal,

    “Financial system is the set of interrelated and interconnected components consisting of financial institutions, markets, and securities.”

    The financial system provides channels to transfer funds from individuals and groups who have saved money to individuals and group who want to borrow money. Saver (refer to the lender) are suppliers of funds to borrowers in return with promises of repayment of even more funds in the future.

    Borrowers are demanders of funds for consumer durables, house, or business plant and equipment, promising to repay borrower funds based on their expectation of having higher incomes in the future. These promises are financial liabilities for the borrower-that is, both a source of funds and a claim against the borrower’s future income.

    #Services Provided by the Financial System:

    The following Services from Financial System is given below:

    Risk Sharing: 

    The Financial system provides risk sharing by allowing savers to hold many assets. It also means the financial system enables individuals to transfer risk.

    Financial markets can create instruments to transfer risk from savers to borrowers who do not like uncertainty in returns or payments to savers or investors who are willing to bear the risk.

    The ability of the financial system to provide risk-sharing makes savers more willing to buy borrowers’ IOUs. This willingness, in turn, increases borrowers’ ability to raise funds in the financial system.

    Liquidity:

    The second service that financial system provides for savers and borrowers is liquidity, which is the ease with which an asset can be exchanged for money to purchase other assets or exchanges for goods and services. Most of the savers view the liquidity as a benefit.

    If an individual needs their assets for their own consumption and investment, they can just exchange it. Liquid assets allow an individual or firm to respond quickly to new opportunities or unexpected events. Bonds, stocks, or checking accounts are created by financial assets, which have more liquid than cars, machinery, and real estate.

    Information:

    The third service of the financial system is the collection and communication of information or we can say that it is the facts about borrowers an expectation about returns on financial assets. The first informational role the financial system plays is to gather information. That includes finding out about prospective borrowers and what they will do with borrowed funds.

    Another problem that exists in most transactions is asymmetric information. This means that borrowers possess information about their opportunities or activities that they don’t disclose to lenders or creditors and can take advantage of this information. The second informational role that financial system plays is communication of information.

    Financial markets do that job by incorporating information into the prices of stocks, bonds, and other financial assets. Savers and borrowers receive the benefits of information from the financial system by looking at asset returns. As long as financial market participants are informed, the information works its way into asset returns and prices.

    #Functions of Financial System:

    Functions and Role of the financial system, market are given below.

    • Pooling of Funds.
    • Capital Formation.
    • Facilitates Payment.
    • Provides Liquidity.
    • Short and Long-Term Needs.
    • Risk Function.
    • Better Decisions.
    • Finances Government Needs, and.
    • Economic Development.

    Now each one Functions of the financial system are discussing on brief:

    Pooling of Funds:

    In a financial system, the Savings of people are transferred from households to business organizations. With these production increases and better goods are manufactured, which increases the standard of living of people.

    Capital Formation:

    Business requires finance. These are made available through banks, households and different financial institutions. They mobilize savings which leads to Capital Formation.

    Facilitates Payment:

    The financial system offers convenient modes of payment for goods and services. New methods of payments like credit cards, debit cards, cheques, etc. facilitate quick and easy transactions.

    Provides Liquidity:

    In the financial system, liquidity means the ability to convert into cash. The financial market provides the investors the opportunity to liquidate their investments, which are in instruments like shares, debentures, bonds, etc. Price is determined on the daily basis according to the operations of the market forces of demand and supply.

    Short and Long-Term Needs:

    The financial market takes into account the various needs of different individuals and organizations. This facilitates optimum use of finances for productive purposes.

    Risk Function:

    The financial markets provide protection against life, health, and income risks. Risk Management is an essential component of a growing economy.

    Better Decisions:

    Financial Markets provide information about the market and various financial assets. This helps the investors to compare different investment options and choose the best one. It helps in decision making in choosing portfolio allocations of their wealth.

    Finances Government Needs:

    The government needs a huge amount of money for the development of defense infrastructure. It also requires finance for social welfare activities, public health, education, etc. This is supplied to them by financial markets.

    Economic Development:

    India is a mixed economy. The Government intervenes in the financial system to influence macroeconomic variables like interest rate or inflation. Thus, credits can be made available to corporate at a cheaper rate. This leads to the economic development of the nation.

    #Main Functions of Financial System:

    The functions of the financial system can be enumerated as follows:

    • The financial system acts as an effective conduit for optimal allocation of financial resources in an economy.
    • It helps in establishing a link between savers and investors.
    • The financial system allows ‘asset-liability change’. When they accept deposits from customers, banks make claims against themselves, but they also make assets when providing loans to customers.
    • Economic resources (i.e., money) are transferred from one party to another through the financial system.
    • The financial system ensures the efficient functioning of the payment mechanism in the economy. All transactions between buyers and sellers of goods and services are easily affected due to the financial system.
    • In the case of mutual funds, the financial system helps in risk change by diversification.
    • The financial system increases the liquidity of financial claims.
    • The financial system helps in finding the prices of financial assets from the
    • contact of buyers and sellers. For example, the value of the securities is determined by capital market demand and supply forces.
    • The financial system helps reduce the cost of transactions.

    As discussed above, financial markets play an important role in economic development through the role of capital allocation capital, supervising managers, saving savings and promoting technological change among others. Economists had thought that the development of the financial sector is an important element to encourage financial growth.

    Financial development can be defined as the ability to obtain information effectively in the financial sector, implement contracts, facilitate transactions, and promote special types of financial contracts, markets, and arbitrators. Should be at a lower cost.

    Financial development occurs when financial tools, markets, and intermediaries improve on the basis of information, enforcement and transaction costs, and therefore provide better financial services. Financial work or services can affect the economy’s savings and investment decisions through capital accumulation and technical innovation and therefore economic growth.

    Capital accumulation can be modeled either through capital peripherals or capital goods, which are produced using constant returns, but without the use of any reproduction factors to stabilize static per-state growth.

    Through capital accumulation, the steady growth rate in the work done by the financial system affects the rate of capital formation. The financial system affects capital accumulation either by either changing the savings rate or by reallocating the savings between capital production levels. Through technological innovation, focus on innovation of new production processes and inventions.

    Because friction of the market and laws, rules and policies are quite different with the economies and the times, the impact of financial development on development can have different effects for the economy allocation and welfare in the economy. Read this in the Hindi language: वित्तीय प्रणाली का अर्थ, परिभाषा, सेवाएं, और कार्य। 

    Meaning Definition Services and Functions of Financial System
    Meaning, Definition, Services, and Functions of Financial System.

  • What is the Cost Accounting Information System?

    What is the Cost Accounting Information System?

    Cost Accounting Information System (CAIS) is an accounting information system that determines the costs of products manufactured or services provided and records these costs in the accounting records. Also, The concept of CAIS studying: Functions of Cost Accounting Information System, Technology of Cost Accounting Information System, and Development of Cost Accounting Information System! It is the key to management’s assessment of the company’s efforts to achieve profit. Since it is so important, the CAIS must be careful to design and properly maintains. Also learn, Financial Accounting, What is the Cost Accounting Information System?

    Learn, Explain What is the Cost Accounting Information System? Functions, Technology, and Development!

    An accounting information system (AIS) is a system of collecting, storing, and processing financial and accounting data that are used by decision-makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. Also, The resulting financial reports can uses internally by management or externally by other interested parties including investors, creditors, and tax authorities.

    Accounting information systems are designed to support all accounting functions and activities including auditing, financial accounting & reporting, managerial/ management accounting, and tax. Also, The most widely adopted accounting information systems are auditing and financial reporting modules.

    What is the Accounting Information System? Accounting Information System refers to the computer-based method used by the companies to collect, store and process the accounting and the financial data which is used by the internal users of the company to give a report regarding various information to the stakeholders of the company such as creditors, investors, tax authorities, etc.

    The cost accounting information system with its operating accounts must correspond to the organizational division of authority; so that the individual foreman, supervisor, department head, or manager can be held accountable for the costs incurred in his department. Also, The concept of authority and responsibility is closely allied with accountability; which recognizes the need for measuring a manager’s discharge of his responsibilities.

    Functions of Cost Accounting Information System:

    Generally, the purposes or functions of cost accounting information systems fall into four categories. These include providing information for:

    1. External financial statements,
    2. Planning and controlling activities or processes,
    3. Also, Short-term strategic decisions and
    4. Long-term strategic decisions.

    These four functions relate to different audiences, emphasize different types of information, require different reporting intervals, and involve different types of decisions.

    The technology of Cost Accounting Information System:

    They are below;

    Input:

    The input devices commonly associated with CAIS include standard personal computers or workstations running applications; scanning devices for standardized data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce. Also, many financial systems come “Web-enabled” to allow devices to connect to the World Wide Web.

    Process:

    Basic processing achieves through computer systems ranging from individual personal computers to large-scale enterprise servers. However, conceptually, the underlying processing model is still the “double-entry” accounting system initially introduced in the fifteenth century.

    Output:

    Output devices used include computer displays, impact and non-impact printers, and electronic communication devices for EDI and e-commerce. Also, The output content may encompass almost any type of financial report from budgets and tax reports to multinational financial statements.

    Development of Cost Accounting Information System:

    The development of a Cost Accounting Information System includes five basic phases: planning, analysis, design, implementation, and support.

    The period associated with each of these phases can be as short as a few weeks or as long as several years.

    Planning, project management objectives, and techniques: 

    Also, The first phase of systems development is the planning of the project. This entails the determination of the scope and objectives of the project, the definition of project responsibilities, control requirements, project phases, project budgets, and project deliverables.

    Analysis: 

    The analysis phase is using to both determine and document the cost accounting and business processes used by the organization. Such processes are redesign to take advantage of best practices or the operating characteristics of modern system solutions.

    Design:

    The design phase takes the conceptual results of the analysis phase and develops detailed, specific designs that can implement in subsequent phases. It involves the detailed design of all inputs, processing, storage, and outputs of the proposed accounting system. Also, Inputs may be define using screen layout tools and application generators.

    Processing can show through the use of flowcharts or business process maps that define the system logic, operations, and workflow. Also, Logical data storage designs are identified by modeling the relationships among the organization’s resources, events, and agents through diagrams.

    Also, the entity-relationship diagram (ERD) modeling is using to document large-scale database relationships. Output designs are documented through the use of a variety of reporting tools such as report writers, data extraction tools, query tools, and online analytical processing tools. Also, all aspects of the design phase can perform with software toolsets provide by specific software manufacturers.

    Implementation:

    The implementation phase consists of two primary parts: construction and delivery. Also, Construction includes the selection of hardware, software, and vendors for the implementation; building and testing the network communication systems; building and testing the databases; writing and testing the new program modifications; and installing and testing the total system from a technical standpoint.

    Delivery is the process of conducting the final system and user acceptance testing; preparing the conversion plan; installing the production database; Also, training the users, and converting all operations to the new system.

    Support:

    The support phase has two objectives. The first is to update and maintain the CAIS. Also, This includes fixing problems and updating the system for business and environmental changes. For example, changes in generally accepted accounting principles (GAAP) or tax laws might necessitate changes to conversion or reference tables used for financial reporting.

    Also, The second objective of the support is to continue development by continuously improving the business through adjustments to the CAIS caused by business and environmental changes. These changes might result in future problems, new opportunities, or management or governmental directives requiring additional system modifications.

    What is the Cost Accounting Information System Image
    What is the Cost Accounting Information System? Image from Pixabay.