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1 – 10 of over 3000The objective of this paper is to empirically test and verify the enablers of volume flexibility and product-mix flexibility and to assess the influence of these flexibilities on…
Abstract
Purpose
The objective of this paper is to empirically test and verify the enablers of volume flexibility and product-mix flexibility and to assess the influence of these flexibilities on operational performance.
Design/methodology/approach
A research framework consisting of nine pairs of hypotheses was developed using an extensive literature review. Using a self-administered questionnaire, 391 responses were collected, and these responses were analyzed using descriptive statistics, factor analysis, and structural equation modeling techniques.
Findings
The findings empirically confirm the enablers of volume flexibility and product-mix flexibility. The proposed model explained 59 percent variance in volume flexibility and 63 percent variance in product-mix flexibility. Volume flexibility and product-mix flexibility together explained 38 percent variance in operational performance.
Research limitations/implications
Theoretically, this study advances flexibility literature in two significant ways. First, the study conducts first of its kind quantitative empirical investigation considering upstream, downstream, and internal integration practices as enablers of volume flexibility and product-mix flexibility. Second, this study adds to the flexibility literature by suggesting the positive influence of volume and product-mix flexibility on the operational performance of firms.
Originality/value
The study reinforces the role of enablers in the development of volume and product-mix flexibilities. Thus, the study provides a comprehensive view of flexibility enablers that can be used as a diagnostic tool, which practitioners can use to assess and deploy flexibility.
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Päivi Eriksson and Keijo Räsänen
This paper focuses on the processes by which different manager groups can influence product mix changes. The paper analyses three different types of process ‐ dominance…
Abstract
This paper focuses on the processes by which different manager groups can influence product mix changes. The paper analyses three different types of process ‐ dominance, compromise and integration ‐ through which the extensiveness and renewal of a product mix was shaped by groups of marketing and production managers, general managers and owner‐managers. Each of the groups developed their own understanding, or “logic of action”, about the most desirable product mix. It is shown that these logics of action play an important role in product mix changes, not as isolated elements but in interaction with one another and the industry context. This paper provides a detailed empirical analysis of a product mix pattern over a long duration by illustrating the three different forms of managerial interaction by which the product mix was achieved. The contribution of the study is twofold. First, the study shows that historical and contextual studies are required in order to understand the role and relevance of marketing activities and marketing based actors in business firms. Second, the study gives evidence for the usefulness of inter‐disciplinary research and discussion within the field of marketing studies.
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Product mix and the acquisition of the assets needed for their production are interdependent decisions. However, these decisions are frequently evaluated independently of each…
Abstract
Product mix and the acquisition of the assets needed for their production are interdependent decisions. However, these decisions are frequently evaluated independently of each other and with conceptually different decision models. This article expands activity-based costing (ABC) to incorporate the cost of capital. The resulting model traces the cost of capital to products and thereby measures the economic value added (EVA) from their production. The discounted value of a product’s EVA over its life is equivalent to its net present value (Hartman, 2000; Shrieves & Wachowicz, 2001). The discounted EVA of a product also equals the net present value of the assets used to manufacture the product. Consequently, evaluating products with an ABC model incorporating the cost of capital enables product mix and capital budgeting decisions to be evaluated simultaneously. The article also examines the role of ABC when product mix decisions are made at the product and portfolio levels of the firm’s operations.
Production planning and control is a complex task in multiple batchproduction situations. Work orders arrive in a random manner and,considering the diverse product array, work…
Abstract
Production planning and control is a complex task in multiple batch production situations. Work orders arrive in a random manner and, considering the diverse product array, work centre capacities loaded and available also change in a random manner. A particular product mix may suit a particular load pattern generated and, to be realistic, the optimum product mix must be considered a dynamic parameter rather than a static one. Considering the multitude of parameters associated, it is difficult to determine the optimum product mix in a manual system. The use of a computer simulation model to determine the optimum product mix and also the criteria to be used in arriving at the pricing strategy under multiple batch production situations are discussed.
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Mohamed E. Bayou and Alan Reinstein
The product‐mix decision has received considerable attention in management accounting and economics literatures. However, many studies in these literatures are contradicting…
Abstract
The product‐mix decision has received considerable attention in management accounting and economics literatures. However, many studies in these literatures are contradicting, inconclusive and lack rigorous analysis of this complex decision. They seek to develop weights for the products in the product mix based on one objective, to maximize the firm’s profit ability. But before developing these weights, the studies must first rank these products, Ranking is a complex endeavor since it is often driven by a multitude of hierarchical financial and non‐financial goals and objectives. Ranking is also difficult due to the use of complex concepts such as time, uncertainty, cost and interdependencies between accounting systems and manufacturing systems and among the products of the product mix. These concepts are inherently fuzzy and coextensively applied often with a confluence of variables operating simultaneously. This paper applies an advanced mathematical model to account for the product mix decision. The model combines the powers of fuzzy‐set theory (Zadeh, 1965) and the analytic hierarchy process (Saaty, 1978). The fuzzy‐analytic‐hierarchical process (FAHP), developed by de Korvin and Kleyle (1999), is sufficiently powerful to account for the ambiguous variables and the web of prioritized strategies and goals of cost leadership, product differentiation, financial objectives of earnings, cash flows and market share and non financial goals such as tradition and owners’ convictions and philosophies underlying the ranking of the products in the product mix. By way of example, the paper applies the FAHP model to rank order four products subject to these strategies and goals.
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The purpose of this paper is to develop a model for the production planning decision of a dairy plant in a multi-product setting under supply disruption risk and demand…
Abstract
Purpose
The purpose of this paper is to develop a model for the production planning decision of a dairy plant in a multi-product setting under supply disruption risk and demand uncertainty while determining the optimal product-mix and material planning requirement.
Design/methodology/approach
A mixed-integer nonlinear programming model is proposed to determine the optimal product-mix that maximizes the expected profit of a dairy. The data are collected through visits to the dairy site, conducting brainstorming sessions with the plant manager and marketing head at the corporate office. Disruption data are collected from the India Meteorological Department, Odisha.
Findings
From the analysis, it is recommended that the dairy should not produce curd during the planning period. Moreover, turnover from toned, double toned and baby food is maximum than that of the curd and these products are produced in the planning period. The expected profit increases from its present value when an optimal product-mix is followed. Sensitivity analysis is performed to analyze the effect of demand uncertainty, supply disruption and production quota. The expected profit decreases as the supply failure probability increases.
Research limitations/implications
The model is implemented in a dairy plant under Orissa State Cooperative Milk Producers Federation, Odisha, India. The proposed methodology has not been validated, theoretically. The concerned dairy is based on the Indian context, but the authors believe that the study is highly relevant to other dairies as well.
Practical implications
This study provides a methodology for dairy plant managers to plan production effectively under supply disruption risk with demand uncertainty. It also suggests material requirement planning at different factories of the dairy plant.
Originality/value
This paper develops a mathematical model for the production planning decision of a dairy plant that determines the optimal product-mix, which maximizes the expected profit of a dairy under disruption risk and demand uncertainty (in the Indian context).
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Hayyah Al Ali and Syed Zamberi Ahmad
This case study focuses on basic business approaches in the decision-making by considering owners and stakeholders’ perspective in highlighting the related issues in customer…
Abstract
Learning outcomes
This case study focuses on basic business approaches in the decision-making by considering owners and stakeholders’ perspective in highlighting the related issues in customer service, marketing (marketing mix and product mix), strategy, business management and operational management of the sport business in the private sector of Abu Dhabi. At the end of this exercise, students should have a clear consideration of the following: understanding of the equestrian business products and services elements, description of the marketing mix the equestrian business products and services elements, definition of the product mix approach of the marketing mix in equestrian business management, distinguishing needs of product mix alternative decisions approach in equestrian business management in the private sector and labeling of two main customer services based issues and propose a solution using product mix alternatives approaches (expand/eliminate).
Case overview/synopsis
Mandara Equestrian Club (MEC) was the culmination of a dream for Faysal Urfali, a Lebanese entrepreneur, and his wife, who lived in (and loved) United Arab Emirates (UAE) for more than 20 years ago. The dream started in 2012, when the Urfali family was vacationing in Spain. They fell in love with the Arabian breed of horses, famous for their wide, flat forehead, soulful eyes, broad muzzle, erect ears, slender neck and flowing, shining mane. Arabian horses are also renowned for their beauty, loyalty, strength and intelligence. Arabian horses are an intrinsic part of Arabian tradition and heritage, always described in Arabic literature as a sign of pride, courage and dignity, in recitation legends of wars. The Urafalis did not have experience with horses during that period, but that did not stop them from starting an equine business in the UAE, specifically in the Emirate of Abu Dhabi. Urfali started MEC in Al Rahba City, a small town in the north site of Abu Dhabi, the Capital of UAE. At its inception in 2013, MEC was open only for private use. In 2014, Urfali decided to open the club to the public due to high demand from visitors and horses’ lovers who were visiting the place to see the horses and request horse rides. MEC carries forward Urfali’s passion for Arabian horses, as it specializes in the care and training of show horses. MEC also offers other equine activities and services for both horse owners and horseback riders. In early 2019, Urfali conducted a meeting to assess MEC’s financial statements and discuss daily business operations. The meeting determined that the club was facing several business challenges to address which, it needs some substantial changes in order to maintain its smooth-functioning. Challenges the club faced involved customer relationship management, customer attraction and skill shortages in the industry. Urfali understood that focusing on MEC as a business operation means raising the marker of success to more than just the fulfillment of a dream. Will MEC be able to keep its focus with such changes?
Complexity academic level
Undergraduate students majoring in Business Management, Marketing and Strategic Management.
Supplementary materials
Teaching Notes are available for educators only.
Subject code
CSS 11: Strategy
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This study investigates how heterogeneity of product mix and production technology affects the use of responsibility accounting practices, the “unbundling” of products for cost…
Abstract
This study investigates how heterogeneity of product mix and production technology affects the use of responsibility accounting practices, the “unbundling” of products for cost management purposes, and the practice of increasing the number of expense accounts to create homogeneous cost pools. To test these relation‐ships, data were gathered from 31 Texas electric utilities. Analyses find that the more heterogeneous the products offered and the more diverse the production technologies employed, the greater the degree of product unbundling (subdividing products for the purposes of collecting and reporting costs), the more cost centers, and the greater the number of expense accounts.
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Majed Alsmadi, Ahmad Almani and Zulfiqar Khan
– The purpose of this paper is to implement an integrated activity-based costing (ABC) and theory of constraints (TOC) approach to enhance decision making in a Lean company.
Abstract
Purpose
The purpose of this paper is to implement an integrated activity-based costing (ABC) and theory of constraints (TOC) approach to enhance decision making in a Lean company.
Design/methodology/approach
Based on the literature, this paper proposes an integrated ABC and TOC approach and applies it to a Lean plastic manufacturing company to improve its product-mix decision.
Findings
The results of the case study show that the current conventional product-mix decision used by the company and the proposed integrated approach can give significantly different results concerning the optimal product-mix and the associated bottlenecks. Moreover, the paper suggests that managers who implement Lean production without utilising a supportive management accounting system may experience disappointing financial results.
Research limitations/implications
The validation of the suggested method is based on a single case study with an action research approach. For future research, the authors suggest the implementation of the approach in different industries.
Practical implications
Overall, the integration of ABC and TOC provides managers with an accurate, timely and reliable tool that can help in making decisions about pricing, production line development, process improvements and product-mix.
Originality/value
This paper contributes to Lean and management accounting literature by demonstrating the value of a method of integrating ABC and TOC. Also a case study is chosen for the empirical aspect of the study as there are no case studies available in the literature that illustrate a real life case of integrating ABC and TOC within Lean companies as an alternative to the current used cost accounting systems.
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The purpose of this paper is to examine traditional costing, activity‐based costing (ABC), and through‐put accounting in an enterprise resource planning (ERP) integrated…
Abstract
Purpose
The purpose of this paper is to examine traditional costing, activity‐based costing (ABC), and through‐put accounting in an enterprise resource planning (ERP) integrated environment for decision making.
Design/methodology/approach
Computer simulation is used to model a manufacturing firm operating under a manufacturing resource planning environment and a theory of constraints environment.
Findings
Through the inclusion of both manufacturing and non‐manufacturing costs and the use of both volume and non‐volume‐based cost drivers, ABC captures manufacturing characteristics and resource usage more accurately than traditional costing and through‐put accounting and results in higher profit, lower inventory, and better customer service for both the short and long term.
Research limitations/implications
This study only simulates industries that have a relatively high‐overhead content and relatively low labor and raw material costs and inventory evaluations includes only work‐in‐process inventory. Studies of a different industry, where raw material content is relatively high and labor and overhead content are relatively insignificant, would also be valuable. Studies that evaluate raw material or finished goods inventory would be helpful.
Practical implications
In order to realize full benefits of ERP integration, a management accounting system should be carefully selected to properly depict manufacturing processes. Management should consider both manufacturing costs and non‐manufacturing costs to capture the characteristics resource usage among products for better decision making.
Originality/value
This study incorporates the ERP system to prevent poor decisions being made from using obsolete or outdated data because changes are now made instantly. The impact of management accounting systems was evaluated through a large‐scale simulation to ensure comparability among experimental settings and to provide realistic manufacturing settings.
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