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Setting materials, labor and overhead standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to offer a quality product at a profitable rate and employees could be overworked. The challenge is to set a high but reasonable standard. Assume that as a manager, you are asked to set the standard materials price and quantity for a new Intel computer chip, a technically advanced product. To properly set the price and quantity standards, you assemble a team of specialists to provide input.

Identify two types of specialists that you would assemble to provide information to help set both the materials price standards and the materials quantity standards. Discuss and explain why you chose each individual.

Given answer

It is challenging to set a high but reasonable standard. Assuming as a manager, I would first assemble an experienced technical engineer to the team to help set up material price stand and material quantity standards. The other type of specialist i would like to assemble is an administrative personnel specialist who has worked for similar product. In the process in determine the standard, an experienced technical engineer can assist in determining the standard of a product and how we can maximize the production with fully usage of the materials acquire. And what type of materials should be used in the production in order to maximize the profit. An experienced technical engineer who understand the process the producing it and the theory of building the new Intel computer chip. And he or she would know what material would work the most effective to produce the product. Therefore, we can obtain a clearer understanding of the relationship between materials and quality of product. Then we can have a more accurate estimate of the production pace and quantity in order to set up a reasonable standard of materials, labor and overhead.

The second specialist I would to assemble to join the process is an administrative personnel specialist because his or her experiences and knowledge of human resources would help set up the standard in labor. He or she can help estimate a worker's working capacity and the cost to hire a extra worker to produce the new Intel computer chip. Through an experiences administrative personnel specialist, we can understand what we can expect from the labor we hire. We can know how many workers we need in a production line, and how efficient a worker can work. We can find out what would be the right standard to set to encourage workers to work to their full potential instead of discourage workers to cheat on production process and results. With assistance from the experienced technical engineer and administrative personnel specialist, we can set up a high but reasonable standard to produce the best quality of products with maximum output and create maximum profit to the company.

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