Lehigh Steel Case Study Essay

Narrator: *Pans over picture 1* While Andrew Carnegie seemed undyingly charitable, nothing tars his good-doing reputation more than the Homestead Strike. The 1890s brought to the steel industry an industrial depression; the prices of rolled-steel products declined from $35 a gross ton to $22--a profit decrease of over a third.

Glaser Health Products manufactures medical items for the health care industry. Production involves machining, assembly and painting. Finished units are then packed and shipped. The financial controller is interested to introduce an activity-based costing (ABC) system to allocate (or distribute) indirect costs to products. Indirect costs, as distinct from direct costs, cannot be unambiguously linked to specific products. The controller would like to calculate product costs based on ABC for planning and control, not inventory valuation.

“Chicago and the nation entered the Progressive era. …The 1901 steel strike ended in defeat for the union, and the once powerful Amalgamated slipped into irrelevancy. Chicago’s steel mills remained unorganized, yet U.S steel tried to sidestep Chicago radicalism by developing a whole new town just across the border in Indiana. Gary, Indiana became the center of the region’s steel industry. Not overtly planned in the tradition of Pullman but nonetheless a company town…”

The partnership of Jacob and Sylvester Harpenau, officially named the Harpenau Brothers, began coal mining in St. Marks, Indiana. Due to the loss in production of coal in St. Marks, the Harpenau Brothers looked west toward St. Meinrad. The options for the partnership included the Abbey Mine; this mine provided coal as fuel to help piece together the enormous sandstone buildings at the Abbey in St. Meinrad. (Luecke 1) When the brothers went to see The Christmas Mine, located very close to the Abbey Mine, it was filled with water. They thought that if they could empty the mine by pumping out the water, they would potentially coal mine it. (Harpenau 2) Around the year of 1944, Jacob and Sylvester reopened the ironically named mine一 The Christmas

Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.

John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.

The first way throughput can be increased is by making sure that the bottleneck’s time is not wasted. According to the text, this means that a bottleneck should never be sitting idle or working on defective parts. When a bottleneck is down for an hour, it is not only the cost of the bottleneck that is lost, but the cost of the entire system. This is because the bottleneck’s capacity is equal to the entire system’s capacity, and whatever a bottleneck produces in one hour is what the corporation produces in one hour. In addition, if a bottleneck works on defective parts or parts that are not needed, it is a waste of time that the bottleneck could be spending on good parts that are needed. Without good parts from a bottleneck, you can’t sell a product or generate throughput.

In 1892, Frick realized there was no centralized management for the company and decided to combine everything to form the Carnegie Steel Company. It was worth $25 million and was the largest steel company in the world. Frick became greedy and wanted to increase profits, so he lowered employee wages. Workers began to strike, so Frick hired 300 strikebreakers to resolve the situation. There was a battle that lasted a day and 60 men were wounded.

hours, as well as accounting for the set up labor costs for every run. The material

Say we have identified the bottleneck machine of a production process. List at least four things suggested in the book that will result in a greater throughput without actually expanding the physical capacity of the machine.

The Goal is a novel, written by Eliyahu Goldratt and Jeff Cox in 1984 with the purpose to spread awareness of Goldratt’s ideas about the production line and cost-cutting. In 1979 (5 years prior to “The Goal”), Goldratt and Creative Output, inc. worked to produce production scheduling software that would, in theory, cut lead time and inventories, and therefore cut costs. The software is called “OPT” (Optimized Production Technology”, and this is exactly what Goldratt was trying to spread awareness of with his book, “The Goal”.

Carnegie Steel Company which was combined of Homestead Steel Works and a line of lake

It is a common desire to have a balanced plant, but this cannot be reached if there are problems with the levels of capacity in the plant. If there is not enough capacity in the plant, it almost seems as if the possibility of having throughput is being lost and if there is an excessive amount of capacity there is money that is being wasted, which would be a problem when trying to reduce the operating expenses. However, in reality the closer that a plant comes to being balanced, the closer they get to losing money. “ Look at this obsession with trimming capacity in terms of the goal,

With the twinning program established by ArcelorMittal, the struggling Burns Harbor Mill was paired with a stronger

Capacity planning is a necessary function of an organization to ensure that the highest rate of output is reached through the current processes taking place within an organization. These strategically defined processes must have the ability to provide flexibility to meet future capacity demand, whether due to opportunity growth or adjustments to make decreases to maximize profits. “Capacity decisions related to a process need to be made in light of the role the process plays within the organization and the supply chain as a whole, because changing the capacity of a