And now we have the answer for the Lean Accounting assignment. And the first question was to identify three issues with logbooks rights process using the box score information. And Firstly, we see that over the 12 weeks, sales of the retail log cabins are relatively stable, but sales of the commercial cabins are increasing quite significantly. And we wonder why the retail market is flat. Secondly, end to end time is increasing significantly. Presumably This is caused by complications in making the commercial cabins or sales of the commercial cabins increase.

Work in Progress is also increasing. And again this probably reflects the increasing process time. Thirdly, right first time quality and on time delivery for the commercial cabins are markedly below that for retail cabins. Fourthly inspiring of increasing commercial sales, the value stream contribution is static. This appears to be related to the increasing material cost percentage for the commercial cabins and likely reflects the increasing problems of manufacture associated with the commercial cabins. Each of those issues require the process team to look into them in more detail, to gather more detail and to examine the process to see where these problems are starting to arise, what steps are causing them, and how can they improve those steps in the process?

Question two was to prepare an action plan for local right. And this is what I've done here. Yours may be different and that's fine. This is my action plan. The issues affecting the commercial cabins of increasing order to delivery production time, reducing quality, reducing delivery performance, increasing work in progress and increasing material cost percentage are all symptomatic Stick of production problems, the process for producing the commercial cabins would appear to be unstable. My action plan therefore, would focus on improving process stability.

Number one, map the production process for the commercial cabins in detail to understand where the problems arise. Number two, analyze the root causes of the problems, devise and test possible solutions to those problems. Number three, select the best solutions, revise work and procedures and train all staff in the new procedures. And number four continue to monitor performance weekly, instigating additional improvements as required. Part Two of the assignment was to model the box score for the potential purchase of a new machine. And here you can see on the screen, the modeling of the boxcar that I've done the current state without the machine The average week's data there and the potential future state with the machine.

And just to comment on a few points, we can see that the number of commercial units output has increased because the additional capacity allows more cabins to be sold. Remember there was additional demand available in the marketplace. We see also that the Process Performance KPIs are improved. Right first time quality for the commercial cabins is improved to 96%. Work in Progress days has reduced to 40 days on time delivery for the commercial cabins has also improved to 96%. Next, if we look at sales of the commercial cabins, we see they've increased by nearly $30,000 per week.

Other costs are increased by the depreciation charges we can see and therefore the value stream contribution of the future state with them It's $52,958 per week, compared to the average of the 12 weeks of 38,753. The value stream contribution percentage compared to sales has increased to 27.5% compared to 24.6% beforehand. And the benefit of the proposal is $14,200 additional contribution per week, which accounts to about $710,000 per annum. And then just the last thing to look at is the material cost percentage for the commercial cabins, which remains the same at 55%, which seems relatively high, it's relatively high compared to the retail cabins and may need further attention further analysis. coming on to part three of the assignment then, the question was, if there were no additional commercial cabin sales available at present, would we advise the machine to be purchased. As we saw in the previous boxcar, the operational performance measures for the production of the commercial cabins would improve and additional available capacity would be created where adding capacity for 1010 new commercial cabins, but contribution would reduce by $2,000 per week being the depreciation cost of the machine.

So, would you advise purchase? Well, my answer is an emphatic Yes, the key aim of lean is to improve the flow of work through the process. The purchase of this new machine does create additional capacity, which the company then can work to develop new customers and new products for so yes, I would propose the purchase of this machine in this case. Finally, part four of the assignments throughput accounting part and here I've modeled the figures on the screen. We have the current state without the machine For the three measures and the full KPIs and the potential future state with the machine, we see that throughput is increased with a machine because it allows us to sell six more commercial cabins. We see that net profit under the throughput accounting definition is increased.

But the return on investment is reduced. productivity is increased, we're doing more in the value stream in the process for the same resources. But investment turns is reduced. So using the throughput accounting ratios, the picture is a bit mixed on this proposed expansion. And I wonder what you think of the throughput accounting approach to this decision compared to the Lean Accounting approach? Personally, I think the Lean Accounting approach gives a much clearer results much clearer analysis, whereas throughput accounting result here is, as I said, a mixed picture and doesn't really definitely push us to make the decision and acquire the machine, though it does improve throughput, which I guess is the primary measure, and it does increase net profit.

But as I say return on investment, and investment turns are reduced under the potential future state. Well, ladies and gentlemen, that's all I have for you on the Theory of Constraints, throughput accounting and Lean Accounting. Thank you for studying this course. I hope that you've learned a lot well done for sticking with it. Thank you for your time. Please look forward to some on my future courses.

I am Ross Maynard, thank you very much and goodbye.