Cost management system based on EUC concept

Computers ind. Engng Vol. 33, Nos 3-4, pp. 653-656, 1997 0 1997 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0360-8352197 $17.00 + 0.00

Pergamon

PII: S0360-8352(97)00214-3

Cost management Sy stem based on EUC concept Hee-Ryn Jang, Toyokazu

Nose, Sennosuke

Kuriyama,

and Yasuo Adachi

Osaka Institute of Technology, Osaka 53 5, JAPAN Osaka In stit ute of Teehno log y, OSaka 53 5, JAPAN Setsunan University, Setsunan 572, JAPAN Osaka Institute of Technology, Osaka 535, JAPAN

Abstract Based on t h e E n d U s e r C o m p u t i n g (EUC)concept, this paper proposes a g e n e r i c s y s t e m u s i n g simplemacro routines of a spreadsheet so ft~are (Microsoft Excel) that can be used in a practical ~ a y b e t ~ o n t h e d i fferent users of eachlevel of an organization.This system is not only formanagers, b u t a l s o foremployees in order to supply co mmon in formati on and en able si mulatio n s an d de cisi on making in the scope of each level's responsibilities. As a cost accounting system model, this paper discusses the possibility to u s e i t in 4 different d e p a ~ m e n t s : Purchasing, Parts-production, Assembly and Sales departments. @ 1997 E l s e v i e r Science Ltd Keyv~rds: Cost management, Production System

necessary changes to adapt its environment to maintain the qua]it y gh lie at the same ti me reducing production costs in order to respond properly to the market. In the same line, this paper considers a mechanism of a Cost Management System to provide an efficient estimation of cost index at the management level by u s i n g cost information andcalculation theory [1].

1. I n t r o d u e t i o n .

Recently, d u e t o enormous development of i n d u s t ~ ' and information technology, the management system has become m o w complex. At the same time, t h e requirements of speed and accuraq' in b u s i n e s s management practices has been required in the development of office and management automation. Those automation forms employing the "End User C o m p u t i n g " (ELL--~) are contributory factors towards the decentralizing of information management, ghere the information is processed at its place of origin. In t h e line of automation togard a generalized system of complete management, there has been intensive g~rk in relation to computer n e t ~ r k based softgare applyi ng quantification theory, fu zzy, neural nets~rk, chaos and groupware theory. These and other theories provide tools which greatly improv e the proficiency of a management system.

2. C o s t M a n a g e m e n t S y s t e m Model b a s e d o n EUC.

improved focusing on [production amount] and [delivery time]; in the field of quality control, the quality improvement has reached focusing on [quality], in personnel management has been focused on [personnel] andfinance on [money]. Until now, the b u s i n e s s management has been administrating those el emen ts independentl y.

Conveniently, the accounting practices should be managed at its place of origin. This enables a more sensible management to take place v,tlere full knowledge of all relevant background data is available, ln practice though, only the results are gi yen to eachdepart merit by the accounting department. The main reason for this situation is d u e t o therequirement of administrating a huge amount of data accumulated w~aich inevitably makes it neeess arc to have an accoun tin g de part men t. Recently, this problem is being approached successfully using End User Computing and is b e i n g increasing accepted. This new model is expected to : (1) provide proper adaptation to the rapid changes in the management environment; (2) provide managers' quantity projections in advance and notify the wiaole organization in order to have common establishments; (3) provide information to t h e manager about the reaction against the plan, i.e., feedback; (4) include all activi ties of the entire or gani zat ion.

However, today with theincreased strength o f t h e y e n coupled with rapid changes in management techniques necessitates a focusing on the reinforcement of both the product and price competitiveness. That is to say, the management staff of each department should make the

The Cost Management System Model proposed is to be applied to purchasing, parts-production, assembly, and sales departments. The realization process is (1) clarify the management functions and define the responsibility; (2) establishes the improved plan; (3)

In the old day, in the field of production control and Industrial Engineering, the productivity has been

653

Proceedings of 19961CC&IC

654

define standards; ( 4 ) establish the loss and profit calculation for cost accountin g; (5)analysis di fferences among plan and standard and actual results; ( 6 ) f o l l o w them up and establish the next plans. Each department and the manager should cooperate for the realization of these steps. Details of these are given in the next sectio n.

3. Exa mple us ing Co st Ma nage men t Sy stem

The f o l l o w i n g 8 figures present the stream of the sequential results with respect to an e x a m p l e u s i n g the spreadsheet Microsoft E~cel.

Fig.2 depicts the input d i a l o g u e screen to enter the standard costs. The planning sales quantity is set to 200,000, which will be used as a standard quantity. The unit purchase price of the rawmaterial is 171 yen. The e x p e n s e budget is planned to be 4.3 m i l l i o n yen. The production of the factory performance is 95% of acceptance ratio !n. t h e p r o d u c t i o n lines, the standard production time per unit is 0.4 hours and the labor cost is 6 0 0 yen per hour. In addition to this,7.6 m i l l i o n yen is planned for the e x p e n s e budget. In a similar ~,ay, a plan for assembly lines can be laid. In the sales department, t h e s a l e s e x p e n s e b u d g e t is 5.8 m i l l i o n yen and the profit rate is planned to be 10%. l~St .Is

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F i g 3 presents a screen xxith the results entered in the Fig. 2. At this level, each department practices the cost accounting and can make adjustments to their different types of data as v+~ell as perform the cost accoun tin g calcul ati on. !

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Fig.1 s h o a s a menu v+lth the 6 functions for the Cost Management System : (1) Explosion of the bill of material using MRP, (2) Input standard cost. (3) Input actual cost, (4) Display standard cost for each department, (5) Display balance sheet for each department, (6) Di splay profit and loss balance sheet.

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Fig.4 presents the calculation the cost among each department. Theresult shov+~ that thestandard costfrom t h e p r o d u c t i o n lines to t h e a s s e m b l y lines is 481 yen,

Proceedings of 1996 ICC&IC from a s s e m b l y lines to sales d e p a r t m e n t is 591 y e n and the standard sales price in the sales department is 6 8 9 yen. I NP U T lICl~l COSTS

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Fig. 8 depicts the profit and l o s s balance sheet. An in tegrated ev aluatio n co rres port din g to th e pl an of th e current period can be produced by u s i n g the profit of the current period and sales profit ratio.

Eig. 5 Input A c t u a l Costs - dialogue screen

Fig.5 s h o w s the d i a l o g u e screen to input the actual costs of each department. And in the next step, each department can practice t h e c o s t m a n a g e m e n t by t h e u s e of their different types of d a t a a s ",,,,ell as actual data. This step is s h o w n in F i g 6 .

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big.9 shows t h e p r o b l e m p r e s e n t e d d u r i n g t h e 6 p e r i o d s r e g a r d i n g the sales price. The s o l u t i o n of t h i s can be t a c k l e d by r e d u c i n g the material cost ( v a l u e e n g i n e e r i n g a c t i v i t y ) and i m p r o v i n g the a c c e p t a n c e ratio (q uali ty c o n t r o l a c t i v i t y ) .

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4. C o n c l u s i o n This paper p r e s e n t e d a g e n e r i c s y s t e m u s i n g s i m p l e macro r o u t i n e s of an e l e c t r o n i c s p r e a d s h e e t ( M i c r o s o f t Excel) that has a practical u s e bet~,een the different users of each level of an o r g a n i z a t i o n . This s y s t e m is not o n l y useful for managers, b u t a l s o for p r e s e n t i n g c o m m o n i n f o r m a t i o n to the p e r s o n n e l in order to run the s i m u l a t i o n and make decision about the i n f o r m a t i o n showrt. With t h i s m e c h a n i s m , the p l a n n i n g t i m e d u r i n g t h e M R P p r o c e s s as v,~ll as p r o d u c t i o n cycle t i m e can be reduced, a n d then more frequent a n d de tail ed in form ati on ca n be expect ed. Re fete nee s 1.

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KuriyamaS.,1985.OA and C o s t A c c o u n t i n g,Office A u t o m a t i o n . Vol. 6, No. 2, pp.59-68 (i n Japanese). K u r i y a m a S., 1976, Parts-Oriented P r o d u c t i o n M a n a g e m e n t System, Japan m a n a g e m e n t As soci ati on. K u r i y a m a S., 1973, A d v a n c e d M a c h i n e r y M a n a g e m e n t, Pu b.Ni hon Kei (i n Japanese). Y o s h i d a I . , 1985, M R P s y s t e m i m p l e m e n t a t i o n , Pub. Ni kkan Koh hoS hinb uns ya (i n Japanese) NoseT., 1994, C o s t a c c o u n t i n g System based on EUC co ncep t .J apart m a n a g e men t sy s tern yo kous yu. pp.69- 72 (i n Japanese).