Brainstorming Ideas: Reduce the Units of Input Not Producing ICDs or Output
Reduce units of Input (I) available but not producing Intermediate Cost Drivers
(ICDs). This action makes Input levels more directly variable with the quantity of the ICD by reducing the amount of the available Input that is wasted or idle. For example, an employee (I) might produce one subassembly (ICD) per day. During that day, the employee spends a total of one hour waiting for parts for the subassembly. If the Company could eliminate that one lost hour of the employee’s work day by providing parts in a more timely manner, the Company could reduce the number of employees (I) needed to produce the same subassembly (ICD) by 1/8th.
B. Shift demand to use unproductive resources.
The company may shift demand from one location, or time period, to another in order to take advantage of idle capacity.
1. Warnings and advice
2. Location: centralize activities
3. TIME: SHIFT DEMAND FOR ICDs TO REDUCE PEAKS
- Change pricing to shift demand Examples>>
- Delay non-critical work until slower times Examples>>
- Arrange schedule to spread demand more evenly Examples>>
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