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Cost Management-final                                                                                                       32

The necessity for replacement of Plants, introduction of new techniques or expansion of facilities should be considered and various alternative explored with a view to reducing costs.

(d)    Production Plan Programme and Method :-

Production control ensures proper planning of work by installing and efficient procedure and programme ordering correct machine and proper utilisation of materials, manpower and resources so that there is no waste of time and money due to wait for components, men, material etc. An efficient cost reduction programme should examine the following points relating to production control.

(i)    Whether wastage of manpower and material is kept to the minimum

(ii)   Whether there is any scope for reducing idle capacity.

(iii)  Whether the procedures for the control of stores and maintenance services are efficient.

(iv) Whether labour wastage may be reduced and productivity increased by eliminating faulty production method, plant layout and designs or introducing incentive schemes.

(v)   Whether there is scope for reduction of over head, whether a budgetory control system is in operation  to ensure the control over overhead costs.

Cost reduction techniques

It may be extended to administrative, selling and distribution methods, personnel management, purchase and material control, financial management and other mischevious services. Tools and techniques for cost reduction :-

1. Budgetary control and standard cost.

2. Work study and organisation and method of procedure.

3. Value analysis.

4. Standardisation.  

5. Simplification and variety reduction .

6. Economic batch quantity (E. B. Q.)

7. Coding and classification.

8. Improvement  in design.

9. Substitute material utilisation.

10. Automation.

11. Operational Research.  

12. Quality Control.  

13. Production  Planning and Control.  

14. Inventory Control.  

15. Purchase Scheduling .  

16. Job evaluation and merit voting.  

17. Training   and  development.  

18. Business forecast.  

19. Market Research .

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