Investment
They invest to earn a return from reserve funds because of their deferred consumption.
They want a rate of return that compensates them for the time period of the investment, the excepted rate of inflation and the uncertainty of the future cash flow. (The people who give up immediate possession of reserve funds that is defer consumption). Hope to receive in the future a greater amount than they surrendered.
Investment:
• Investment is the ongoing responsibility of dollars for a period of time in oder to drive future installments that will compensate the investor for:
1. The time the funds are committed.2. The expected rate of inflation during time period.
3. The uncertainty of the future payments.
How do investor measure the rate of return on an investment?
1. Measure of Historical rates of return.
2. Measure the average Historical rates of return.
3. The average rate of return of portfolio of investments.
Measure of Historical rates of return: On an individual investment over the time period the investment is held (that is its holding period).
Measure the average Historical rates of return: For an individual investment over a number of time periods.
Return for the period:
The period during which you own an investment is called holding period and the return fod that period is the holding period return(HPR).• HPR value is always be zero or greater, it can never be negative value.
• A value greater than 1.0 reflects an increase in you wealth, which means that you received a positive rate of return during the period.
• A value less than 1.0 means that you suffered a decline in wealth, which mean that you had a negative return during the period.
• In case of zero indicates that you lost all your money (wealth) invested in that asset.
Holding period Yield:
The conversion of an Holding period return to an annual percentage rate is to derive a percentage returns, reffered to as the holding period Yield (HPY).Quality Cost Report
What is quality cost report?Cost of production Report (C.P.R).
Cost of every department.
Income Statement (I.S).
Quality Cost Report:
1. Prevent cost2. Appraisal cost
3. Internal Failure cost
4. External Failure cost
I.S.O 9000 to international standard. This standard is about employees health and safety.
Prevent cost:
It is much better to prevent deffects rather than finding and removing then from products the cost inquired to avoid or minimize the number of deffects of first. Place are known as prevent cost.For Example: Work training, quality engineering, Depreciation on prevention equipments, incentives and awards, Training and education, Statistical process, control activities Supplier evolution.
Appraisal Cost:
That are inquired to identify deffective product before they are shipped to customer.For Example:
Investory Inspection, Reliability testing, Testing equipment depreciation, Supplies inspection.
Internal Failure Cost:
That are inquired to remove deffects from the product before shipping them to customer.For example:
Rework, Rejected products, scraped, re-inspection, down time.
External Failure Cost:
If deffective product have be shipped to customer external Failure Cast Drive.For Example:
Warranty repairs and replacement lost sales because of poor repotation payment for damage arising from the use of deffective product customer relation.
Q:ABC manufacturing company sales bicycles in 2007 the company had 1 Billion (1000000) sales following information is available?
Material Inspection ; 4000Finished Products Inspection ; 20,000
Product Design Refuse ; 10,000
Quality Testing ; 3000
Scrap ; 12,000
Employee Quality Training ; 30,000
Customer Quality Complain ; 18,000
Return goods ; 8000
Rework ; 5000
Solution :
ABC manufacturing company Quality cost Report:
Prevent cost:
Material Inspection : 4000
Employee Quality Training : 30,000
product Design Refuse : 10,000
Cost prevention cost : 4.4 percentage 4000+30000+10000=44,000
Appraisal cost:Finished product inspection : 20,000
Quality Testing : 3000
Toal Appraisal cost:2.3 percentage
20,000+3000=23,000
Internal Failure cost:Scrap :12,000
Rework : 5000
Total internal Failure cost:1.7 percentage
12,000+5000=17,000
External Failure cost:customer Quality Complain : 18000
Re-turned goods : 8000
Total external Failure cost : 2.6 percentage
18,000+8000=26,000
Total Quality cost report: 110000 and 11 percentage.
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