Production and Cost

Paper Summary:

This paper explains that getting a product to the consumer is a linear process in which each step requires different production and cost considerations. The paper points out that the short-term issues of production and cost involves reducing the cost of individual components; whereas, the long term production and cost issues can redirect economics to improve production through various means while still attempting to reduce short-term production costs. The paper presents the just-in-time mode, developed by the Toyota Motor Corporation, in which suppliers provide just the required amount of a raw material or product in just the time that a manufacturer or market demands that item.

From the Paper:

"Short-term concerns are those dealing with the procurement of raw materials and potentially repurposing manufacturing machinery to meet the needs of a new product. While long-term production costing involves reducing set up time and even specializing equipment to manufacture goods more effectively. Long-term production and cost issues can also more effectively focus on prevention expenditures as presumably a product outlook is healthier than it was at an earlier time and can absorb the short term costs of such applications to help avoid unforeseen costs in the future."

Sample of Sources Used:

• Dorf R. C and Kusiak, A. (1994) Handbook of Design, Manufacturing and Automation. New York: Wiley-IEEE.
• Value, in Economics. (2004). In The Columbia Encyclopedia (6th ed.). New York: Columbia University Press.
• Hegji, C. E. (2001). Fixed Cost, Marginal Cost and Market Structure. Quarterly Journal of Business and Economics, 40(1), 17.
• Kee, R. C. (2001). Evaluating the Economics of Short- and Long-Run Production-Related Decisions [*]. Journal of Managerial Issues, 13(2), 139.
• Ohno, T. (1988). Toyota Production System: Beyond Large-Scale Production New York, NY: Productivity Press.

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