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Use of the cumulative average cost start‐up formula as the standard (instead of the traditional incremental cost or unit cost formula) allows the derivation of cumulative total costs and marginal unit costs. Accurate incremental costs can also be obtained by taking the difference between cumulative total costs at the upper and lower points of the increment. Furthermore, look‐up tables (commonly used with the traditional approach) are no longer needed.

Evaluating capital investments for additions or modifications to warehouses, for replacement of equipment or for entirely new facilities is a complex activity which involves numerous financial, competitive and other considerations. The financial aspect of capital investments is addressed and it is shown how ten different investment criteria can be brought to bear on the capital investment issue. The ten investment criteria consist of five primary criteria and five secondary criteria. The primary criteria are payback period in years, non‐discounted rate of return on investment, internal rate of return, Baldwin rate of return, and benefit cost ratio. All ten criteria are described and suggestions are made when each criterion is appropriate.

In this paper the impact of the top management team’s (TMT) cognitive and demographic characteristics on the firm’s strategic assets management performance is evaluated. Strategic assets are those assets as defined by the resource‐based value of the firm, also often referred to as core competencies. The performance measure used is relative efficiency in converting the firm’s strategic assets into firm performance measured by return on investment and return on sales. The technique used to measure relative efficiency is data envelopment analysis. Of the 13 TMT characteristics evaluated about half were statistically significant. The study was performed on firms in the domestic airline industry.

A batch size model developed for the therapeutic product problem has been instrumental in assisting the staff of a large general hospital to resolve problems associated with the transactional process of the preparation of intravenous medications for administration. The model is a variation of a basic profit maximisation model and is characterised by variable batch preparation cost, a variable planning period, fixed per unit base cost, and zero shortage costs since preparation of a new batch can take place without delay. The variable planning period is transformed into a fixed planning horizon which is at least several multiples of the planning period and is fixed. Development of the model is presented and illustrated with a hypothetical situation, followed by a real case — the determination of the optimal batch size for the intravenous drug, Cefazolin.

A method is developed for evaluating forecasting models with respect to both error and complexity in forecasting. Several types of forecasting accuracy measures (MSE, MPE, MAPE, Theil′s U‐Statistic and a loss cost function) are examined and the approach is illustrated using short‐term forecasting methods, and weekly and four‐weekly data. The approach can, however, be applied equally to immediate, medium‐ and long‐term forecasting.

Separating functional areas, especially in the product design and manufacturing process, is a historical problem in many organisations and has cost them dearly. In today′s globally competitive world, functional area integration, or at least maximum two‐way communication between each pair of functional areas, is necessary for product‐manufacturing firms to remain competitive. The issue of integrating functional area is explored in detail. Five approaches are suggested to facilitate functional area integration. They are: joint programme meetings; matrix organisation format; phased sign‐off approach; use of a computer‐aided design (CAD) system for communication; and development of a programme approach.

A detailed review of the functions being played by the component and parts suppliers for Japan's automobile, consumer products and industrial products firms. In addition, a similar function is reviewed—that being played by the employment subcontractors in process industries such as steel mills and in other industries which cannot so readily use parts suppliers, such as shipbuilding yards.

A management system which has been used in Japan's Toyota Motor Company for many years is described. The system is applicable to the assembled goods industry and is widely used in such circumstances in that country. It extends well beyond production and inventory control and incorporates a number of features of a decidedly Japanese nature. Dominant among these is just‐in‐time production which is examined at some length. Also described is Kanban, and several of its elements, which is an essential aspect of just‐in‐time production.

The purpose of this paper is to describe a study of the successful application of the theory of constraints (TOC) to a manufacturing plant operations problem. The TOC application required the identification of a bottleneck constraint in the manufacturing process which limited through‐put and thus negatively affected plant productivity and efficiency.

The methodology used was a detailed case study of the bottleneck in the manufacturing process. The bottleneck in this case was the mold‐changing operations, consisting of a plastic injection process for heavy‐duty truck‐lighting systems components.

It was found that to eliminate the bottleneck four separate solution approaches were applied to the problem, and these four solutions collectively eliminated the bottleneck constraint.

The limitation of this approach is that the application of the TOC method is highly specific to the particular operation.

On completion of the study the mold‐changing process improvements resulted in increased through‐put and concomitant improvements in productivity and efficiency in the heavy‐duty truck‐lighting systems plant.

Over the past three decades, many researchers have studied the relationship between sales and production departments. This has raised the question: Does the quality of the relationship between production and sales affect the customer? This study uses survey methodology to examine the link between customer satisfaction and the interface variables (connectedness, conflict, coordination) from both a sales and a production perspective. Customer satisfaction responses are aggregated for each sales‐production combination and analyzed to determine the impact of the relationship between production and sales personnel. Product type (i.e. engineered‐to‐order (ETO)) is introduced as a moderating variable. Results indicate that there is a significant impact on customer satisfaction as a result of the cross‐functional situation when moderated by product type. The main managerial implication is that the internal relationship between sales and production is important to the customer, specifically in ETO product situations.