Chapter 7 Essay

310 WordsFeb 22, 20132 Pages
Ch 7 (2) asks you to look around your daily life through the lens of an operations manager. Look at the flows of value through some business. In regards to the work-in-process (a part of the overall inventory of a business), look at it this way. A business (including services) takes raw inputs and transforms them into something of greater value to the customer. In the case of a restaurant, it could be strips of raw bacon and eggs. The restaurant keeps these ingredients in a refridgerator (hopefully) and then, when you order breakfast, they further add value to the raw ingredients and ultimately, deliver them to you to eat. Up and until you take possession of them (and pay for them), those eggs and bacon represent “stuff” that you have added value to during the transformation process. At each stage, additional costs (hopefully valuable to the customer) are added in the transformation process. Value is added when you order the raw materials, when you receive them, store them, and transform them. Now, some of the “value” may not actually be value to the customer, but each and every event represents a cost incurred by the business owner. Prior to you starting to transform the raw materials, it is considered raw goods type of inventory. This has the least costs. But, as you add labor or your value to the product (this works in services as well), up until you have completed the value added processing, it is work in process (WIP). Now, depending upon how important the delivery function is to the customer (i.e. valued), the material after completing the value added processing, can be considered finished goods rather than WIP. Ch 7 (8), the question ended referring to an excel sheet. Forget that. It had nothing to do with the question. Sorry about

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