10.6 Describe the impact of time as a cost driver.
1) The customer response time reveals how quickly customers respond to a company's new products.
2) Customer response time is the time between when a company first markets a new product, and when sales exceed supplies on hand (test inventory).
3) Uncertainty about when customers will demand a product or service is generally credited as being the primary cause of bottlenecks.
4) Manufacturing lead time is a combination of order receipt time and order manufacturing time.
5) Manufacturing lead times can affect costs but do not affect sales revenue.
6) Customer-response time is a measure of how long it takes for the customer to return a call.
7) Manufacturing lead time is the sum of waiting time and manufacturing time for an order.
8) Two important drivers of time are limited capacity and bottlenecks.
9) The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.
10) Inventory carrying costs include the opportunity cost of the investment.