1. The "modern factory" is one in which machines do the work; people monitor, repair, and improve. This is rather different than the 1930s model on which most of today's accounting is based.


2. To be commercially profitable, manufacturing systems must produce at low cost, in a timely manner, and trade costs against markiet conditions.


3. This course provides the tools needed for making the necessary analyses, both before and after the fact.

1. Cost analysis
   • + Variable costs of repetitive manufacturing with batch size due to learning and volume discounts
   • - Materials, other inputs
   • - Yield, rework, and returns accounting
   • - Costs of quality measures
   • - Survey of "overhead" i.e., costs which don't fit the antiquated model
   • - Volume independent costs e.g., supervision, engineering
   • - Maintenance
   • - Setup, order processing
     
     
2. Net present value and all that
   • Decent chapter: de Neufville chapter 13
   • Net present value calculations
   • Selecting the discount rate
   • Risk adjusted discount rates -- pro and con
   • Other common approaches e.g., payback periods. When they are valid and when not.
   • Importance of terminal values.
     
     
3. Valuing capabilities/ investments
   • - Capacity costs
   • + Value of flexibility
   • + Profit maximization, as opposed to cost minimization
   • + Value engineering.
     
     
4. Economic analysis of engineering activities
   • - Costs of product development
   • -/+ Costs/benefits of process improvement.
     
     
5. Where does the money REALLY go?
   • - Setups and model changeovers
   • - Order processing costs
   • - Dealing with problems, rejects, etc.
     
     
6. Basic modeling tools
   • Scenario analysis
   • Risk analyses with model for quantification
   • Sensitivity analysis + dealing with uncertainty (intro)
     
     
7. Entreprenuring Team Project
   • Huddle to decide on a manufacturing venture
   • Form a small team 2-5 members (more members, more detail and polish expected)
   • Compose a Business Plan suitable for seed investment
   • Include spreadsheet financial projections.
     • 3 to 5 years by quarters including sales, expenses, equity, and options, including ownership evaluation projections.
     • Perform financial analysis ending with investors' Return on their Investment.
     • Explain how investors get liquidity in their returns.
   • Perform an interactive class presentation with participaton by every team member.
     
     
8. Creative economic engineering: putting it all together.
   • System design for deep commercial analysis.

1. Case studies on individual topics.
   • Select among several designs for a product, and their associated processes.
   • Go over a design or manufacturing process at a local company, to estimate its "true" cost.
   • Harvard Business Case on "Step Change at Dupont's [Nylon fibers'] CamdenPlant"
     
     
2. Published materials.
   • Karl Ulrich on "The Role of Product Architecture in the Manufacturing Firm"
   • Odyssey - Pepsi to Apple ... A Journey of Adventure, Ideas, and the Future

The technological upheavals portrayed in Alvin Toffler's popular book, Future Schock (1970), is used as a guide to portray upside entrepreneurial opportunities.

Table of Contents:

• Present Shock's Opportunities
  
  
• Designs vs. Guesses
  
  
• Paradigms in Retailing
  
  
• Economics & Diffusion
  
  
• Technological Opportunities
  
  

The Seminar presentation's slides are available on the internet at: "Present Shock's Emerging Opportunities"