Question

Management accounting systems tend to parallel the manufacturing systems they support and control. Traditional manufacturing systems emphasized productivity (average output per hour or per employee) and cost. This was the result of a competitive philosophy that was based on mass producing a few standard products and "meeting or beating competitors on price." If a firm is going to compete on price, it had better be a low-cost producer.

Firms achieved low unit cost for fixed sets of resources by maximizing the utilization of those resources. That is, traditional production strategies, were based on the economies of mass production and maximizing output for a given productive capacity. The United States has experienced over 100 years of unprecedented economic prosperity in large part because innovators like Henry Ford applied these economic principles with a vengeance.

Competitors, never being completely satisfied with their present condition, were always looking for ways to lower the cost of a product or service even further to gain some temporary cost advantage. Additionally, productivity gains were achieved by standardizing work procedures, specializing work, and using machines to enhance the productivity of individual workers.

Please address the following:

1. Henry Ford made a non-famous statement that the Model T "could be had in any color as long as it was black."

Explain what you think he meant by this statement.

2. Once understood, the economies of mass production were applied to most sectors of the American economy. Universities, hospitals, and airlines are prime examples.

Describe how the concept of mass production, standardization, and specialization have been applied to lower the cost of a college education.

Answer 1

1. Henry Ford's statement Model T " could be had in any color as long as it was black ".

Model T was a platform product . Henry Ford disrupted the way people moved from one place to another by designing and manufacturing an affordable car who have adecent income.One of the color choice was black.

At the time of release it costs$240 only. It was also the first car to be manufactured in a moving assembly line. At mid 1920s half of the cars in the world were Model Ts. They were manufacturing at a rate of 9000 to 10000 cars a day. The demand for these cars was so large that they should be removed out of the factory as soon as possible . In that factory one Model T vould be produced innabout 93 minutes. As it is observed that Black paint dried the fastest. Hence the Expression " You can have your car in any color you want ,as Long as it is black "

For's aim was to mass produce cars as inexpensively as possible to make them available to as many people as possible. At that time Black was the least expensive , most durable color available. The elimination of other options kept manufacturing cost lower by eliminating the purchase of multitude of paint colors and kept the assembly line flowing smoothly as there was no trasition between paints.

Hendry For's resolve was consistant with the comment he made in 1909, He was able to scale production over 2million cars per year . His aim was minimising the changes to the Model T platform many components remained the same, reducing the factory hours per car, Setting aggresive and finding ways to achieve those prices and producing cars with standradised parts in factories all over the world.

The basic principle of Ford was , Mass production, Standradisation and Specialisation. This is in the vision for achieving the optimum utilisation of Men ,Materials , Time and Money. As long as you have created a brand and is very visible in the market then your aim should be to minimise cost and optimise profit margin.

2.Concept of Mass Production ,standradisation and Specilisation in College Education .

Mass Production

In the case of the college education industry, if there are more students in a class the cost can be reduced and apportioned amongst more number of students , resulting in decreasing the cost of education. This is subject to the number restriction as per the rules framed by the Governments.Ex: Let us consider 2 cases in both the cost of college education is $5000 and if there are only 20 students in a class $250 and if there are 30 students the cost per student will be $166.67

2. Standardisation

In the case of , standradised college education, that is if the studies are standradised, there is a less requirement of teachers . Since the same teacher will teach in different classes with his knowledge. There by decreasing the cost of maintaining more teachers , there by reducing the cost of college education

3. Specialisation

If a teacher is expert and specialised in his/her subject , then it will result in the elimination of work duplication , save valuable time, reduce the number of teachers, equipments ,facilities, utility, materials supplies and administrative cost . This will reduce total cost and resulting in reducing the cost of college education.

In this modern times experts are teaching from the comforts of their home at their own timings , students are learning form the chosen experts also from the comforts of their home . This substantially reduces the Investment by institutions in infrastructure ,reduces human resources engaged , saves lot of travel time , , the most valuable one in all humanbengs case . This results in a cost reduction in all areas connected with education.

So in this troubled time we have to go to the principles of Minimalisation and optimisation of the scares resources available at our disposal.