Determination of Product Cost in a Steel Plant...

Determination of Product Cost in a Steel Plant The term ‘product cost’ means the amount of expenses [actual or notional] incurred on or attributable to the production of the specified product. Product cost refers to the costs used to produce the product. It is the measurement in monetary terms of the amount of resources used for the purpose of production of the product. For effective monitoring, specific product cost (cost per unit of product produced) is usually determined. A steel plant consists of several processes which are integrated. These processes produce many intermediate products as well as semi-finished and finished products. Many of intermediate products and semi-finished products along with all the finished products are saleable products. There are also a large number of by-products which are being produced from these processes. These by-products are used either internally within the plant or are being sold to different customers. In such a situation, the cost of the saleable products is determined in the steel plant in several stages. Each stage has a product for which the cost is determined. This product may be a saleable product or may be an intermediate product used as a raw material for the next stage. In case the intermediate product of a certain stage is the raw material for next stage then the determined cost of the product along with the cost of handling losses for the product is assigned to the next stage to the extent the product is consumed in the next stage. The product cost in a steel plant is determined the way it is done in any other manufacturing organization. The total cost of producing a product basically consists of two components (Fig 1) namely (i) fixed cost, and (ii) variable cost. Fig 1 Component of...

Stores Management

Stores Management Store is an important component of material management since it is a place that keeps the materials in a way by which the materials are well accounted for, are maintained safe, and are available at  the time of requirement. Storage is an essential and most vital part of the economic cycle and store management is a specialized function, which can contribute significantly to the overall efficiency and effectiveness of the materials function. Literally store refers to the place where materials are kept under custody. Typically a store has a few processes and a space for storage. The main processes (Fig 1) of  store are (i) to receive the incoming materials (receiving), (ii) to keep the materials as long as they are required for use (keeping in custody), and  (iii) to move them out of store for use (issuing). The auxiliary process of store is the stock control also known as inventory control. In a manufacturing organization, this process of receiving, keeping in custody, and issuing forms a cyclic process which runs on a continuous basis. The organizational set up of the store depends upon the requirements of the organization and is to be tailor made to meet the specific needs of the organization. Fig 1 Main processes of a store Store is to follow certain activities which are managed through use of various resources. Store management is concerned with ensuring that all the activities involved in storekeeping and stock control are carried out efficiently and economically by the store personnel. In many cases this also encompasses the recruitment, selection, induction and the training of store personnel, and much more. The basic responsibilities of store are to act as custodian and controlling agent for the materials to be stored, and to provide service to users...

Forward and Backward Integrations...

Forward and Backward Integrations Forward and backward integrations are two integration strategies which are adopted by organizations to gain competitive advantages in the market and to gain control over the value chain of the industry under which they are operating. These strategies are one of the major considerations when developing future plans for an organization. Together these two strategies are known as vertical integration.  The process of backward and forward integrations is shown in Fig 1 Fig 1 Process of backward and forward integration Vertical integration is the degree to which the organization owns its upstream suppliers and its downstream buyers for further product processing. Contrary to the horizontal integration, which is a consolidation of many organizations that handle the same part of the production process, vertical integration is typified by one organization engaged in different parts of production (e.g. production of raw materials, manufacturing, transporting, marketing, and/or downstream processing of end products. Vertical integration describes when an organization purchases or starts a company that it either buys from or sells to and integrates this new business into its own. In case of forward integration the organization integrates its businesses toward the end customer while in case of backward integration the organization integrates its activities in the direction away from the customer. Backward integration can be a part of the organizational strategy due to the competitive benefits it provides. Organizations which governs the entire value chain are, however, very rare. Some organizations choose to adopt for forward integration while other organizations opt for backward integration. Also some other organizations continue to operate disintegrated depending on the environment under which these organizations are operating and also depending upon the future strategic planning which these organizations have done for their future operations. Forward integration extends organizational...