CIS 502
By Matt Gumm, Steve Schaefer, and Kathleen Kerr
The Gas Turbine Fuel Systems Division of Parker
Hannifin Corporation is in the business of developing and manufacturing
fuel nozzles for use in jet engines. The Division also has an FAA approved
overhaul facility for overhauling and repairing fuel nozzles currently
in the field. The biggest customers are General Electric Aircraft Engines,
The United States Government, Pratt & Whitney, Rolls Royce LTD and
AlliedSignal. The following describes the process at the Overhaul Facility.
Accounting Process:
-
The company utilizes a standard cost system.
-
In the overhaul environment, the bill of material consists of component
replacement percentages.
-
No formal method for tracking costs associated with reworked material.
-
All scrap is manually tracked.
-
A monthly physical inventory is performed.
-
With the current standared cost system, the costing of various levels of
overhaul for pricing purposes is difficult.
The monthly physical inventory is not as complete as a typical year end
inventory would be due to closing time constraints. Nozzles are counted
by model number at their respective overhaul stage and value is assigned
based on a percentage of completion method. The standard cost includes
component replacement parts. This cost is calculated as the percentage
part replacement over time. This percentage is manually calculated by dividing
the quantity of parts issued from stock into the total number of nozzles
shipped for any specific model. Material usage variances arise from differences
between actual replacement percentages for the month versus the bill of
material. Material disposition reports are written out by the operators.
Again, these are manually totalled and sorted by disposition cause and
part number. The value of the dispositioned hardware is not calculated
and booked, however scrap is written off as an element of a production
variance. Shop floor employees do not accurately record rework hours on
their time cards as they do not know whether a specific part is going through
the rework process. The scrap costs are a component of the forced out production
variance which also consists of unknown labor variances and material usage
variances.
Production Control Department Expenditures:
-
Two to three hours per day visually locating material on the shop floor.
-
Ten hours per day manually writing receiving tickets.
-
Ten hours per day writing 'comp cards' (shop floor control routings or
travelrs). This information is all located on the receiving ticket.
-
Seventy-five percent of its time performing non-value added activites.
-
Countless hours manually planning capacity and replacement hardware procurement
from the OEM facility.
2-3 hours
10 hours
10 hours
|
visually locating materials
writing/receiving tickets
writing comp cards |
| this space intentionally left blank |
|
Production
Control Department Time Expenditures
Before each morning's production meeting, countless hours
are spent manually determining what the days output might be and what the
outlput for several days and weeks ahead will be. Even with the manual
time spent gathering production information, errors in judgement are still
made. The company suffers substantial down time due to material shortages.
Calculating turn times is also a manual documentating process. This information
is necessary to management so they can satisfy customer requirements. Each
nozzle has its own shop floor traveler, so paperwork floods the shop floor
and errors are often made as a result. Should a problem arise in the field,
it would be necessary to manually re-trace paperwork for that nozzle, possibly
years later.+
As a result of the company's inability to accurately trace the parts through the
cycle, there is often an abundance of work in process (WIP), idle space and people,
and difficulty in control over scheduling.
Billing is another time consuming, manual process. Several programs
have tiered pricing while others have one set price for the overhaul. As
a result, 'comp cards' have to be located and tracked down in order to
determine the work scope performed.
Send questions to Webmaster.
Link
to Parker Hannifin Stock Quote & Chart
This web page was created to fulfill some of
the requirements for Dr. Stephen Hayne's ASU West Class CIS502.
The GE90 powered Boeing 777