Whether you are constructing a new building, installing a new computer, or introducing a new product to the market, you are using project management strategies to get from A to B. This note concentrates on the Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). By reading this note, students will find that these techniques have been designed to ensure high-quality projects are completed on time and on budget.
This case enables students to gain insights in two areas of control system design: transfer pricing and how a myopic view of control systems can create problems; in two instances the company considered a specific behavioral aspect of a measurement scheme, but neglected to recognize the possibility of undesirable side effects of its approach.
The CEO of a bicycle manufacturing company is considering outsourcing the production of one of the company's lines to a low-cost manufacturer. Students must analyze the relevant costs and strategic implications.
A middle manager has an attractive new product proposal that is expected to make a lot of money. However, senior management is rejecting it. Students must analyze the proposal and determine whether it is as good as presented and, if so, how to present it.
The CEO of a supplier of parts to automobile and truck companies has three concerns about the companuy's present cost accounting system: (1) its adequacy for purposes of cost control, (2) its accuracy in arriving at the true cost of products, and (3) its usefulness in providing data to judge the supervisor's performance.
The CEO of a retail distributor is trying to decide whether to keep or discontinue a product line. Students must undertake a tricky differential cost analysis
The CEO of a manufacturing company is assessing the value of variable costing as opposed to full-absorption costing. The teaching note contains a simple exercise to assist students to understand the differences.
A survey of Fortune "1000" companies shows that many companies deal with the problem of soaring interest rates by establishing investment centers and using return on investment (ROI) to measure their performance. Profit centers measure their own profitability with net income, pretax income, or net contribution. Investment centers determine profitability in relation to the unit's own investment base. Many companies use both ROI and RI (residual income) to calculate performance. The worst problem in using ROI or RI is that they will increase solely with time as depreciation reduces the investment base. The last calculation is to determine ROI budgets for investment centers.