Costing By Excel - Jan 2010
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Transcript of Costing By Excel - Jan 2010
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Costing by Excel
Dick Lam Jan 2010
Back to Basic
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Course Rationale
Operational Efficiency &
Effectiveness
Model/Template
Principles
Detail + Logic => Flexibility
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Course Outline
Day 1 - am• Underlying principles of MRP
• Forward-looking of inventory forecast
• BOM & Routing
• Takt time on labor requirement
• Exhibition of Excel Models
Day 2 (Template Construction)
• MRP Fine Tuning template
• Stock Aging Report
• ConclusionDay 1 – pm (Excel skill training)• Special Excel functions introduction
• User-defined functions introduction
• BOM & Routing worksheet model
• Simple MRP calculation
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Sorry!
• I am not JIT (Just in time) expert
• I am a spreadsheet worker who is working on detail, building spreadsheet model, constructing formula, pulling data from “ERP” system and giving instruction
• I always argue with our IT for detail working – Excel, please
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Disenchantment
• I am an accountant but,• I found that some concepts in accounting are
not applicable in inventory management– Inventory Turnover, Inventory Days– Inventory Forecast– Ratio analysis
• Before the above realization, I often got dissonance with our operation people until a day, I learnt Excel and their functions & programming
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Realization
• Mindset of working in detail• All calculation must have workings• All workings must have evidence• All evidence must have its milieu• All milieu must have its assumptions and
objectives
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Back to Basic
then
Build from Scratch
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Basic Formula
• Opening + In – Out = Closing
• Opening + Purchase – Sold = Closing
• Purchase = Closing – Opening + Sold
• Closing = Summation of Units to be sold of future days covered by Target Inventory Days
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Before doing anything
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Let’s start the jigsaw puzzle
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Example - II
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Excel Library
• Inventory by weeks– stkweeks, wstkbal
• Inventory by days– stkdays, dstkbal
• How to install library?• Additional: dcdays, dcbal
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Example - I
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Target Inventory Days/Weeks
• In inventory perspective, it is the cushion to handle any fluctuation of future demand
• It asserts that inventory balance should be various on the future demand
• It is also the tolerance of cash being held up in terms of inventory
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Another perspective
• By setting 3 weeks of target inventory weeks, you pull in the requirement inventory 3 weeks well in advance
• e.g., if you need to use RM-A in week 10 by 100 units, Week 11 by 200, Week 12 by 300, the order time is 5 weeks
• Refer to worksheet example
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Condition for setting
• Magnitude of fluctuation
• Lead time
• Tolerance of cash hold up
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Safety Stock Level
• How do you define it?– It is the estimated consumption of a certain
period of time to cater for any fluctuation of demand happen at any point of time
• Should it be based on past experience or future demand?
• Can we prove it?
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What should be MRP?
• BOM Materials• But what should be included in BOM?
– All precious items– All items in pieces– All packing materials?– All consumables? (but what is consumables?)– All tools?– All needs to be measured!!
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Critical to reduce Stock
• Short lead time by supplier• Equalize MOQ to SPQ • Minimize SPQ• More accurate forecast (!!)• Frequency of delivery• Lead time offered to your customers /
Width of frozen window
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MRP Fine Tuning
• Purpose– Spot out the following problems
• Abnormal balance• Reveal Shortage to trigger pull-in• Reveal Excessive Stock to trigger push-out• Insufficiency of inventory balance
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MRP Fine Tuning
• Assumption– 8 Weeks of Inventory to monitor– HK WH takes time to ship to PRC WH– Available Qty = WH Qty – Reserved Qty– Overdue P/O Qty not considered– 3 weeks of requirement as Safety Inventory
Level
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MRP Fine Tuning
• Data to highlight– HK WH & PRC WH Qty < 0– Available Qty < 0– 1st week requirement consumes HK WH Qty– Weekend Qty < next week requirement– Excessive Qty
• Already excessive with additional P/O Qty• With P/O Qty, it is excessive
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BOM & Routing
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BOM
• For simplicity, we only focus on single level BOM
• We only concern about the quantity after normal scrap specified in BOM
• We assume the unit of measure of RM in BOM same as warehouse SKU
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Materials Demand
• Using the demand forecast for the materials requirement
• Applying basic formula for the purchase of materialsPurchase = Closing – Opening + Sold
• This purchase forecast is on a weekly basis
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Routing
• It is the flow of production
• It is based on workstations which specify the labor hours to complete every task of the assembly process
• It is related to Takt time in optimization
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Routing - Problems
• Labor Cost / Man Hours
• Inefficiency
• Low Season / Fluctuation
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Stock Aging Report
• Assume FIFO, first in first out for the incoming materials
• Categorize inventory in order to sort out the focus
• Focus on the irregular pattern of incoming transaction – it should be leaning to right
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Special Excel functions
• Range Name• Operator: &, $• min, max• vlookup(key, range, column, true/false)• Match• Iferror(formula, value)• Index(range, row, column)• Indirect(cell.address)• sumif, sumproduct
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Tips
• Index > vlookup• Remember the use of $• Great value of “&”• When using “indirect”, reference to the
original formula• Batch total & check sum• Refresh your memory
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Conditional Formatting
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Get Data from Database
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• Indicate if certain condition is met to highlight
• It can be a compound formula• Not to have so many
color combination