Re: Actual Cost Puzzle

We are BPCS 405 CD AS/400 Mixed Mode
I just got back from several days unconnected to internet & hundreds of 
e-mail await my attention so I may have missed good answer to this one.

Check SYS800 System Parameters for how you are averaging cost from month to 
month - weighted average

Run queries over inputs to cost for absurd errors that got missed.  For 
example, we have some data entry people who accidentally put labor hours into 
the quantity field creating decimals in inventory that should always be whole 
numbers.  Same kind of error keys shop order # twice, one of them into 
quantity field, or quantity into hours ... actual cost is what people report 
as having actually done, but the process of entering the data can have errors 
of absurdity that no one notices.  BPCS does not know that the input is 
absurd, it figures the actual cost as if the absurd input is valid.

For the items with the cost that you think is bogus, run queries to inspect 
all labor & inventory postings going back for several months, to see if there 
is activity that does not seem quite right.

When you run cost roll ups ... are only a few people supposed to be doing 
them, in full communications with each other, or is there the risk of too may 
cooks ... one person starts a roll-up but before it gets finished someone 
else starts another one?

We have a large number of items where we do not like the ratio of actual cost 
to standard cost.  We have identified items we want to track cost input 
carefully.  When we have the time to futz with this, we run a query which 
identifies for those items we are tracking, if any got shipped in the latest 
billing, and if so, what are the shop order numbers of the final assembly ... 
with any luck, we are then able to run CST270 on just those items & recent 
work reported on their sub-assemblies.

What we find are:
someone did some substitions who did not know how to report them properly:
improper reporting or keying of labor by members of crew, where the quantity 
completed should be divied up by all the workers on the crew;
labor reported out of sequence, forcing pull through, then correct tickets 
appear late;
a new machine is being used on other than the work that is routed through it;
errors in BOM routings, where an engineering change had occurred but not gone 
through proper channels, so what was being reported as actual was quite 
different than standard for the operations that had been changed;
basically - tons of reporting problems on the items we tracking, which were 
selected because of the most agregious discrepancies between standard & 
actual cost, or very high rate of abnormal quantity adjustments

There have been past posts here by people who do not give CST270 a lot of 
credit for validity & reliability.  It defines a variance as ... we were 
going to make 1000, we actually made 800, so that's a variance of 200.  I 
define a variance as ... we made 800 in X hours, while the standard says we 
should have made it in Y hours, figure the variance based on X & Y.  

Was the labor & inventory reporting in sync with each other, or does it 
appear that someone reported SFC600 without corresponding inventory 
transactions or vica versa ... we normally use JIT600, but when we need to 
fix misposted hours with no quantity involved, we use SFC600 to avoid 
inviting lot control which occurs when no quantity completed or scrapped, but 
then sometimes an inexperienced user enters data that should have gone via 
JIT600 by SFC600 instead.

>  From:    s_bhadoriya@hotmail.com (sudhir bhadoriya)

>  we are on BPCS ver 6.04 on As/400.For some items BPCS is showing too 
>  high Actual Cost as compare to my standard Cost for those items.
>  
>  i wish to know how system is calculating that Actual cost ? means what is 
> the break up of that high Actual cost ( cost set 1 and bkt 0)
>  
>  help appreciated.
>  
>  sudhir singh

Al Macintyre  ©¿©
http://www.cen-elec.com MIS Manager Programmer & Computer Janitor
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