Counting the cost of AMT investment

Article Abstract:

Advanced manufacturing technologies (AMT), have increased companies' competitiveness by improving the production process. However, but managerial accounting systems have not been adapted to reflect the changed environment. Companies have been unable to justify AMT with the application of traditional capital investment techniques, but companies must not abandon financial appraisal techniques in the rush to implement AMT. Firms frequently ignore some of AMT's benefits that are difficult to quantify in financial terms. As a result, excessive hurdle rates are used; inflation is incorrectly incorporated into analysis; the payback method is used instead of discounted cash flow; and comparisons of investment erroneously are made with the status quo. Instead, accountants must use discounted cash flow techniques to evaluate AMT investments and accept only those projects in which yields are higher than the capital expended.

Just in time inventory systems, Just in time systems

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The theory of constraints

Article Abstract:

The theory of constraints (TOC) proposed by management guru Eli Goldratt emphasizes the importance of bottleneck management and challenges the usefulness of traditional accounting. In the book 'The Goal,' Goldratt and his co-author argue that conventional accounting measures only serve to inhibit the successful application of throughput thinking and the achievement of increased competitiveness. They contend that the only figures that managers need to know is their companies' throughput, inventory and operation expense. These numbers will tell them how much money the business generates, captures and can invest in operations. TOC challenges the accounting profession to prove its relevance and to re-examine the principles on which it is founded.

All Other Miscellaneous Manufacturing, Manufacturing industries, not elsewhere classified, Manufacturing Industries NEC, Analysis, Managerial accounting

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