11 Simpler version of traditional ABC Time used as driver base Calculation of driver rate Cost of capacity to provide service Time available to complete service Cost = time required * driver rate Time-based ABC
12 Traditional “push” system Results in mismatch between supply and demand Excess inventory or lost sales Just-in-time systems
13 JIT “pull” system Better match between supply and demand Less inventory Possibly slower response Just-in-time systems
14 Requirements of JIT Flexible capacity and workforce Smooth production flow Short cycle times and processing times Reliable suppliers Commitment to quality Just-in-time systems