Reduce the Units of Input Not Producing 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 or reduce the unproductive resources.
The company may shift demand from one location, or time period, to another in order to take advantage of idle capacity. Alternatively, the company may reduce excess resources either with layoffs or shortened work weeks
Excess resources: Reduce resources that are not needed for the current level of demand
|1||2400||2009||The window and door manufacturer, Pella, is instituting a four day work week for about a third of its 3900 employees. The company is putting these employees on a short work week rather than laying them off because it believes that the economy could turn around and does not want to get caught short of experienced workers.|
|2||3312||2009||AK Steel has put some employees on a shortened work week, with reduced pay. The company believes that most employees prefer a reduction in hours to being laid off.|
|3||9111||2009||The mayor of Atlanta is cutting the hours and pay of 4600 employees by 10%. The city is facing a budget shortfall. If the mayor were to lay off workers, rather than reducing hours, the city would have to eliminate some important services.|
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