Wednesday, June 28, 2017

Cost Measurement - Principle of Industrial Engineering


21 Cost Measurement


Industrial engineers have to know at the start of the year, the unit cost figures of various products being produced in their organizations. They have to be involved in measuring the costs at the end of the period. Their contribution is reflected in the reduction shown in the unit costs at the end of the year. The value of the work of IEs to the company is the cost reduced over the year.

Measurement of costs today is the responsibility of cost accounting department.  But it only provides the proof for the effective industrial engineering work.

Industrial engineers must learn cost measurement and they should be able to visualize how costs incurred daily become unit costs of products. Their cost reduction also first focuses on various resources used in daily work. But any saving of resource has to become a reduction in some product's unit cost. The IE must be able to see the future consequence of his current action clearly and check whether it happened or not according to his plan at the end of the period.

Principles of Industrial Engineering - Presentation 

by Dr. K.V.S.S. Narayana Rao in the 2017Annual Conference of IISE (Institute of Industrial and Systems Engineering) at Pittsburgh, USA on 23 May 2017


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