Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.889851 0.791834 0.775822 10105.06 15 intercept Machine Hours Coefficients 102559.9 1.073838 Standard Error 14249.1 0.152706 t-Stat P-value 7.197642 6.97E-06 7.032087 B.SE-00 Lower 95% Upper 95% 71776.6 133343.2 0.743938 1.403739 The number of labor hours per month runs between 15,000 and 25.000. The number of machine hours is between 70,000 and 125.000, depending on the mix of products being made. The controller hopes that this preliminary study will show that regression is - feasible tool for developing cost-estimating equations. She has asked you for a memo indicating which equation to use, and whether it will do the job. After she has read your memo you will meet with her to discuss the results Required: Write a memorandum to the controller. Justify your recommendation. Use the guide- lines in Appendix A. 3-40 Falue-adding and non- value-adding stivities and coots MUL Company manufactures six types of products. The products are relatively stan- dard, not made-to-order. MUL takes orders from customers, then fills the orders from stock or manufactures the required units. The company keeps finished units in a warehouse that it also uses for materials and components. The Quality Control Division inspects all shipments of materials and components, as well as all finished products before they are shipped. The company holds a two to three-month supply of parts and components that it uses to make high-volume products. MUL's purchasing manager is responsible for obtaining materials and components at the lowest possible cost and so scours the country looking for the best deals. MUL therefore uses a good many vendors. Production begins by withdrawing the necessary materials and components from the warehouse, inspecting them for possible deterioration during storage and transporting them to the first station that works on the product. Each station does one function, such as drilling, planing. welding, and various assembly operations Each station has an area to store materials and components for jobs that it has not yet started. The materials wait in the area until the station is ready to begin the job. Setup time in going from one product to another is often substantial at some sta tions After the workers at the station have finished with their part of the job, they send the semi completed units along with the materials and componenta not yet in stalled to the next station. There the same process is repeated and so on until all work is completed. In some cases, a job will go to the same station more than once because it requires the same operation at different stages of production At the conclusion of production, units go to the Quality Control Division to awal testing and inspection. They then go to the Warehouse for shipment. The company spare good units are held in the warehouse until another order arrives. Defective usually makes 10% more units than needed for an order to allow for defects. Any units are sometimes reworked and sometimes sold as scrap. Reworked units are defect, its manager is held responsible. (Bonuses for station managers are based stored in the warehouse. If it is possible to determine which work station caused the largely on total pood output. In cases where it is not possible to determine the source of the defect, no one is held responsible. The factory manager has said, it gets pretty hectic at the end of each month when we're trying to finish up jobs and get the stuff out to the warehouse- The cyclotimo varios among types of products, but runs from 10 days to 45 days depending on various factors. Required: What activities previously described do not add value to products? What changes in operations can you recommend? Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.889851 0.791834 0.775822 10105.06 15 intercept Machine Hours Coefficients 102559.9 1.073838 Standard Error 14249.1 0.152706 t-Stat P-value 7.197642 6.97E-06 7.032087 B.SE-00 Lower 95% Upper 95% 71776.6 133343.2 0.743938 1.403739 The number of labor hours per month runs between 15,000 and 25.000. The number of machine hours is between 70,000 and 125.000, depending on the mix of products being made. The controller hopes that this preliminary study will show that regression is - feasible tool for developing cost-estimating equations. She has asked you for a memo indicating which equation to use, and whether it will do the job. After she has read your memo you will meet with her to discuss the results Required: Write a memorandum to the controller. Justify your recommendation. Use the guide- lines in Appendix A. 3-40 Falue-adding and non- value-adding stivities and coots MUL Company manufactures six types of products. The products are relatively stan- dard, not made-to-order. MUL takes orders from customers, then fills the orders from stock or manufactures the required units. The company keeps finished units in a warehouse that it also uses for materials and components. The Quality Control Division inspects all shipments of materials and components, as well as all finished products before they are shipped. The company holds a two to three-month supply of parts and components that it uses to make high-volume products. MUL's purchasing manager is responsible for obtaining materials and components at the lowest possible cost and so scours the country looking for the best deals. MUL therefore uses a good many vendors. Production begins by withdrawing the necessary materials and components from the warehouse, inspecting them for possible deterioration during storage and transporting them to the first station that works on the product. Each station does one function, such as drilling, planing. welding, and various assembly operations Each station has an area to store materials and components for jobs that it has not yet started. The materials wait in the area until the station is ready to begin the job. Setup time in going from one product to another is often substantial at some sta tions After the workers at the station have finished with their part of the job, they send the semi completed units along with the materials and componenta not yet in stalled to the next station. There the same process is repeated and so on until all work is completed. In some cases, a job will go to the same station more than once because it requires the same operation at different stages of production At the conclusion of production, units go to the Quality Control Division to awal testing and inspection. They then go to the Warehouse for shipment. The company spare good units are held in the warehouse until another order arrives. Defective usually makes 10% more units than needed for an order to allow for defects. Any units are sometimes reworked and sometimes sold as scrap. Reworked units are defect, its manager is held responsible. (Bonuses for station managers are based stored in the warehouse. If it is possible to determine which work station caused the largely on total pood output. In cases where it is not possible to determine the source of the defect, no one is held responsible. The factory manager has said, it gets pretty hectic at the end of each month when we're trying to finish up jobs and get the stuff out to the warehouse- The cyclotimo varios among types of products, but runs from 10 days to 45 days depending on various factors. Required: What activities previously described do not add value to products? What changes in operations can you recommend