Maximizing Profit: How to Measure the Financial Impact of Manufacturing Decisions, 1st Edition (Paperback) book cover

Maximizing Profit

How to Measure the Financial Impact of Manufacturing Decisions, 1st Edition

By Walter Thrun

Productivity Press

254 pages

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Paperback: 9781563272714
pub: 2002-12-05
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Description

Maximizing Profit is unique in its coverage of the financial accounting measures that pertain to the profitability of advanced manufacturing operations. It provides actionable techniques to help managers assess their current practices and employ new ways of thinking about the business plan.

Highlights Include:

  • Revealing counter-productive performance measures
  • Identifying the operational objectives that will realize the greatest profits
  • Managing with optimization techniques
  • Reassessing the make-or-buy decision
  • Incorporating lean manufacturing activities into the aggregate plan
  • Rethinking traditional capital project ranking techniques
  • Measuring the financial impact of multiplant operations.

    Employing a hypothetical company case study, based on the author's actual experiences, Maximizing Profit guides you through a series of common manufacturing decisions such as product mix, process improvement, make-or-buy, and capital investment. A CD with an interactive Excel Solver spreadsheet tool — an optimization algorithm — is included that allows you to follow the team in the case study step-by-step as they shed prior assumptions and use optimization techniques to inform decisions.

    Maximizing Profit's practical information on the major decisions that will increase cash flow make it a "must read" and "must have" book for managers in manufacturing entities, specifically, general managers, manufacturing/operations managers, controllers, manufacturing/industrial engineers, and purchasing managers, as well as students of industrial business management.

Reviews

"Using the Profit Maximization Techniques developed by Walt Thrun will allow any production facility to calculate their maximum profit obtainable. Now there is no need to guess what the optimum product mix should be for your plant, what Capital Projects to implement, what your budget and forecast should be. This has the potential to revolutionize productivity as we measure it today. Let's quit getting better at doing the wrong things and start doing the right things."

Steve Ryan, Turnaround Planning, Sunoco Inc., Tulsa Refinery 06/01/04

"Without the precepts in Maximizing Profit, most manufacturing organizations are at an immediate disadvantage when making make or buy decisions, choosing which process improvement to implement, or even which capital improvement to make. Each decision will impact the bottom line. The question is, will it be positive or negative in regard to the bottom line? The ability to now focus on the maximization of contribution answers this question and reveals the opportunities that await every business owner, general manager and anyone else involved in making decisions."

Chris West, Project Engineer, The Nordam Group 06/01/04

"Imagine having a tool that could make quantum leaps in company profitability with no added capital investment, cost reduction, or product price increases. Within Maximizing Profit lies that tool, evidenced not only in my reading of the book, but in my application of its concepts."

Michael Pierce, Plant Manager, West Coast Processors 06/01/04

"This easy-to-read book offers a refreshing new look at non-traditional methods to measure manufacturing performance in terms all decision makers can understand: profit. Armed with readily available computer tools, Walt Thrun confidently and logically assaults conventional thinking and methods in performance measurement and leads the reader to obvious conclusions about the relationship between constraints and profitability. Such measures as overhead absorption, cost allocation and plant utilization are replaced with profit optimization, contribution maximization and return on investment."

Michael Piggott, Quality Assurance Manager, Waterloo Industries 06/01/04

"The difference between variable costs and fixed costs is like night and day. Academia of today intertwines the two in the standard cost system and produces graduates with a blurred view of cost accounting. Walt Thrun shows the fallacies of the standard cost system and gives a contemporary alternative. As an engineer, I appreciate the calculation to find the correct product mix to maximize profit."

Rob Renfro, Gear Products, Inc. 06/01/04

Table of Contents

Section I: Manufacturing Activities are Ultimately Expressed in Financial Terms

Chapter 1: Operational Improvements Don't Necessarily Translate to Financial Success

Section II: Exposing the Existing Counter-Productive Performance Measures

Chapter 2: The Standard Cost System: Manufacturing's Millstone

Chapter 3: Maximizing Gross Profit: Introduction to Optimization Techniques

Section III: Maximizing Return on Investment (R.O.I.) is the Ultimate Objective: How to Get There is the Great Challenge

Chapter 4: Which Operational Objective Will produce the Most Profit?

Section IV: Getting the Most From What You Have: Learning How to Manage with Optimization Techniques

Chapter 5: Measuring the Financial Benefits of Manufacturing Process Improvements

Chapter 6: A New Look at the Make or Buy Decision

Chapter 7: How to Evaluate New Business with Optimization Techniques

Chapter 8: Should we Be a Subcontractor?

Section V: Selective Growth and System Expansion Using Optimization Techniques

Chapter 9: Optimizing the Capital Budget with Better Measurement of the Financial Benefits from Proposed Equipment Additions

Chapter 10: Rethinking Traditional Capital Project Ranking Techniques

Section VI: Illustrating the Aggregate Planning Process

Chapter 11: Developing the Aggregate Plan Using Optimization Techniques

Chapter 12: Incorporating Lean Manufacturing Activities (and Other Operational Improvements) into the Aggregate Plan

Chapter 13: Capital Budgeting is Just One Step in the Seamless Process

Chapter 14: Finalizing the Aggregate Planning Process

Section VII: Evaluating Multiple Plant Operations Using Optimization Techniques

Chapter 15: Measuring the Real Financial Impact of Multiplant Operations

Section VIII: Summary - Retracing the Steps to Becoming a User of Optimization Techniques

Chapter 16: Summarizing OpTek's Journey from Traditional Activities to Optimization Techniques

Section IX: Appendices

Appendix A: Activity Based Costing (ABC): Determination of ABC Rates Presented in Chapter 2

Appendix B: Using Excel Solver to Execute the OpTek Algorithm

Appendix C: West Coast Processors: A Case Study

Appendix D: Other Proponents and Applications of Optimization Techniques

Glossary

Index

Subject Categories

BISAC Subject Codes/Headings:
BUS053000
BUSINESS & ECONOMICS / Quality Control