1InventorymanagementLesson62Introductionoflesson4examinetherelationshipbetweeninventorymanagementandrelevantcostsofinventorydiscusstheeffectsofcarryingcosts,economicorderquantity(EOQ),andjust-in-time(JIT)parebackflushcostingwithtraditionalcostingsystems3Lesson4TopicsoutlineInventorymanagementandEOQEstimatinginventory-relatedcostsSupply-chainanalysisandmanagementMaterialrequirementplanningandjust-in-timeproductionsystemsJITpurchasingsystemsBackflushcosting4Topic1:

InventorymanagementandEOQLearningObjectiveMakerecommendationsbasedonthecalculationoftotalannualrelevantcosts,economicorderquantity,re-orderpoints,andsafetystocklevels.RequiredreadingChapter20,pages560-566.51. Tobalanceorderingorsetupcostsandcarryingcosts.2. Tosatisfycustomerdemand.3. Toavoidshuttingdownmanufacturingfacilitiesbecauseofmachinefailure,defectiveparts,unavailableparts,orlatedeliveryofparts.4. Tobufferagainstunreliableproductionprocesses.5. Totakeadvantageofdiscounts.6. Tohedgeagainstfuturepriceincreases.TraditionalReasonsforCarryingInventoryTopic1:InventorymanagementandEOQ6InventoryManagementForoperationsinventoryrepresentsthelargestsinglecost,andcanalsobeasourceofcompetitiveadvantage—notonlythroughtheproductitself,butalsothroughtheuseofefficientdistributionchannels.suchassupermarkets,largeretailstoreslikeWalMart,andmanufacturingcompanieslikeMazdaorDellComputers,Topic1:InventorymanagementandEOQMegaLoMart7InventoryManagementInventoryManagementisplanning,coordinating,andcontrollingactivitiesrelatedtotheflowofinventoryinto,through,andoutofanorganizationTopic1:InventorymanagementandEOQ8MajorcategoriesofcostsassociatedwithinventorymanagementManaginginventoriestoincreasenetincomerequireseffectivelymanagingcoststhatfallintothesefivecategories:PurchasingCostsOrderingCostsCarryingCostsStockoutCostsQualityCostsTopic1:InventorymanagementandEOQ9MajorcategoriesofcostsassociatedwithinventorymanagementPurchasingCoststhecostofgoodsacquiredfromsuppliers,includingfreightOrderingCoststhecostsofplacingandreceivinganorder

preparingandissuingpurchaseorders,receivingandinspectingtheitemsincludedintheorders,andmatchinginvoicesreceived,purchasesordersanddeliveryrecordstomakepaymentsTopic1:InventorymanagementandEOQ10MajorcategoriesofcostsassociatedwithinventorymanagementCarryingCosts

thecoststhatarisewhileholdinginventoryofgoodsforsale.costsassociatedwithstoragetheopportunitycostoftheinvestmenttiedupininventoryStockoutCoststhecoststhatresultwhenacompanyrunsoutofaparticularitemforwhichthereiscustomerdemand(stockout)andthecompanymustactquicklytomeetthedemandorsufferthecostsofnotmeetingitTopic1:InventorymanagementandEOQ11MajorcategoriesofcostsassociatedwithinventorymanagementQualityCoststhecoststhatresultwhenfeaturesandcharacteristicsofaproductorservicearenotinconformancewithcustomerspecifications.Thesecostsinclude:PreventionAppraisalInternalFailureExternalFailureTopic1:InventorymanagementandEOQ12TheAppropriateInventoryPolicyHowmuchshouldbeorderedorproduced?Whenshouldtheorderbeplacedorthesetupbeperformed?TwoBasicQuestionsMustbeAddressedTopic1:InventorymanagementandEOQ13EconomicOrderQuantity

Thefirstdecisioninmanaginggoodsforsaleistodeterminehowmuchofagivenproductshouldbeordered.Ordertoomuch,inventorybecomesobsoleteandthecompanyissaddledwithlargecarryingcosts.Ordertoolittle,andthecompanywillbeplacingfrequentordersandexperiencingstockouts.TheEconomicOrderQuantity

(EOQ)isadecisionmodelthatminimizescombinedorderingandcarryingcosts.choosetheinventoryquantityperordertominimizecostsTopic1:InventorymanagementandEOQ14TotalCosts=Orderingcosts+CarryingcostsTC=PD/Q+CQ/2Ordering&CarryingCostsWhereTC=Thetotalordering(orsetup)andcarryingcosts P= Relevantorderingcostsperpurchaseorder

(orthe costofsettingupaproductionrun) Q=Thenumberofunitsorderedeachtimeanorderis placed(notnecessarilytheEOQ) D=Demandinunitsforspecifiedperiod C=RelevantcarryingcostsofoneunitinstockforthetimeperiodusedforDTopic1:InventorymanagementandEOQ15Ordering&CarryingCostsIllustratedTopic1:InventorymanagementandEOQ16Economicorderquantity

ModelEconomicorderquantity(EOQ)=2PD/CD=8,000pairsoftheshoes

P =￥40perorderC =￥1200÷8000+(12%×￥60)Topic1:InventorymanagementandEOQEOQ=2×8000×40÷7.35=295pairsoftheshoes

17TotalCosts=Orderingcosts+CarryingcostsTC=PD/Q+CQ/2Economicorderquantity

ModelTopic1:InventorymanagementandEOQ=￥1,085＋￥1,085=￥2,170Thenumberofdeliveriesforeachtimeperiodwouldbeasfollows:D/EOQ=8,000÷295=27.11,or28deliveries.18BasicEOQAssumptionsThereareonlyorderingandcarryingcostsEOQignorespurchasingcosts,stockoutcostsandqualitycosts

Thesamequantityisorderedateachreorderpoint.Demand,orderingcosts,andcarryingcostsareknownwithcertainty.Purchasingcostperunitisunaffectedbythequantityordered.Nostockoutsoccur.Themanagershavemaintainadequateinventorytopreventthem.Managersconsidercostsofqualityandshrinkageonlytotheextentthatthesecostsaffectorderingorcarryingcosts.Topic1:InventorymanagementandEOQ19ReorderPointOncethedecisionoforderquantityhasbeenmade,theseconddecisionfacingmanagementiswhentoorderagivenproduct.Thisrequiresdeterminationofthereorderpoint.Thisisthequantitylevelofinventoryonhandthattriggersanewpurchaseorder.Topic1:InventorymanagementandEOQ20OrderingPointsThepurchase-orderleadtimethetimebetweenplacinganorderanditsdelivery.Topic1:InventorymanagementandEOQ(orRateofusage)21Example:averagingdemand160perweek,andtheleadtimeis1week.Reorderpoint=NumberofunitssoldxLeadtime =160x1=160pairsThus,anordershouldbeplacedwheninventorydropsto160pairs.ReorderPointTopic1:InventorymanagementandEOQ22ReorderPointIllustrationInventoryInunitsTimeEOQReorder

PointPurchaseorderleadtime(1week)Topic1:InventorymanagementandEOQ160pairs23InventoryManagementand

SafetyStockOrdersdonotalwaysarriveontime.Theremaybeshippingdelays,strikes,weather-relateddelays,fluctuationsindemand,orotherfactorsthatpreventtheorderfromarrivingbeforeastockoutoccurs.Inordertoprotectagainstastockout,thecompanyshouldprovideforsafetystock.Topic1:InventorymanagementandEOQ24SafetyStockIllustrationInventoryInunitsTimeEOQReorder

PointTopic1:InventorymanagementandEOQ160pairsSafetystock25InventoryManagementand

SafetyStockSafetystockisinventoryheldatalltimesasabufferagainstunexpectedevents.regardlessofthequantityofinventoryorderedusingtheEOQmodelTocalculatesafetystock,multiplythemaximumexcessaveragingdemandperunittime(week/day)timestheleadtime(week/day).Topic1:InventorymanagementandEOQ26SafetyStockComputationIllustrationTopic1:InventorymanagementandEOQDemandlevelsresultinginstockouts–Inventoryavailableduringleadtime(excludingsafetystock)160pairs–safetystockStockoutinunits×Relevantstockoutcostsof￥3perpairAnnualdemand8,000pairs÷295EOQProbabilityofStockout×RelevantStockoutcosts×Numberofordersperyear27SafetyStockComputationIllustrationTopic1:InventorymanagementandEOQSafetystock×Annualrelevantcarryingcostsof￥7.35perpairAssumesthatsafetystockisonhandatalltimesandthatthereisnooverstockingcausedbydecreasesinexpectedusage.28SafetyStockComputationIllustrationTopic1:InventorymanagementandEOQ29SafetyStockComputationIllustrationTopic1:InventorymanagementandEOQAtasafetystocklevelof90pairs,nostockoutwilloccurand,hence,expectedstockoutcosts＝￥0=(250-160)×130ReorderPoint&SafetyStockInventoryInunitsTimeEOQReorder

PointTopic1:InventorymanagementandEOQ160pairsSafetystock(40pairs)295pairs31Topic2:

Estimatinginventory-related

costsLearningObjectiveDescribetheimpactoferrorsinestimatinginventory-relatedcosts,andexplaintheimportanceofgoalcongruence.RequiredreadingChapter20,pages567-568,upto“Just-in-TimePurchasing”32EstimatingRelevantCosts

TheEOQmodelisonlyaseffectiveasthenumbersthatgointothecalculation;therefore,itisimportanttoidentifyandestimatetherelevantcostsasaccuratelyaspossible.Relevantinventorycostsincluderelevantincrementalcosts

relevantopportunitycostsTopic2:Estimatinginventory-relatedcosts33RelevantincrementalcostsEstimatinginventoryincludecoststhatchangewithvaryinglevelsofinventory,includingCarryingcostsinsurance,propertytaxes,obsolescence,breakage,spoilage,rentorstoragespace(opportunitycosts);salariesandutilities;orderingcostsstockoutcostsNote:Manyofthesecostsdonotvarywhenonemoreunitofinventoryisadded.Topic2:Estimatinginventory-relatedcosts34RelevantOpportunityCost

CarryingcostslostrevenueontheinvestmentcashtiedupininventoryStockoutCostthecontributionmarginonlostsalesTheseopportunitycostsarenotusuallyrecordedintheaccountingsystem.Topic2:Estimatinginventory-relatedcosts35Importanceofgoal-congruence

ininventorymanagementFrequently,therewillbeconflictbetweentheEOQmodelandthemodelsusedforperformanceevaluation.Theprimaryissueisthattherearenoopportunitycostsrecordedinthefinancialaccountingsystems,andthereforethisisnotusuallyapartoftheperformance-evaluationmodel.Whenthisisthecase,managersmayactintheirownself-interesttothedetrimentofthecompany.Topic2:Estimatinginventory-relatedcosts36Importanceofgoal-congruence

ininventorymanagementManagersshouldtakeactionsthatareinthebestinterestofthecompanyasawhole.Tocreategoalcongruence,thepurchasingmanagershouldbeevaluatedonaperformancemeasurethatincludesopportunitycostsofcarryinginventory.bychargingmanagersresponsibleformanaginginventorywithcarryingcoststhatincludearequiredreturnoninvestment.Topic2:Estimatinginventory-relatedcosts37CostofaPredictionErrorThreestepsindeterminingthecostofapredictionerror.RefertoExample4.1andassumethatP=￥60insteadof￥40.Computethemonetaryoutcomefromthebestactionthatcouldbetaken,giventheactualamountofthecostperpurchaseorder

TRC=(D/Q)×P+(Q/2)×C =(8,000÷362)×￥60+(362 =￥2,656Topic2:Estimatinginventory-relatedcostsEOQ=2PD/C38CostofaPredictionErrorComputethemonetaryoutcomefromthebestactionbasedontheincorrectamountofthepredictedcostperpurchaseorder TRC=(D/Q)×P+(Q/2)×C =(8,000÷295)×￥60+(295 =￥2,711ComputethedifferencebetweenSteps1&2 ￥2,656–￥2,711=(￥55)costofpredictionerror.Thecostdifferenceofapredictionerrorisusuallysmall.Topic2:Estimatinginventory-relatedcosts39SensitivityoftheEOQtochangesinorderingandcarryingcosts

Topic2:Estimatinginventory-relatedcostsAnnualdemand(D)=8,000pairs40SensitivityoftheEOQtochangesinorderingandcarryingcosts

Topic2:Estimatinginventory-relatedcostsAnnualdemand(D)=8,000pairsCarryingcosts41SensitivityoftheEOQtochangesinorderingandcarryingcosts

Topic2:Estimatinginventory-relatedcostsAnnualdemand(D)=8,000pairsOrderingcosts42Topic5:JITpurchasingsystemsLearningObjectiveCalculatetheeffectofJITpurchasingoninventorycosts,anddescribebenefitsanddrawbacksofaJITsystem.RequiredreadingChapter20,pages568-572,from“Just-in-TimePurchasing”upto“InventoryManagementandMRP”43Just-in-TimePurchasingJust-in-Time(JIT)PurchasingisthepurchaseofmaterialsorgoodssotheyaredeliveredjustasneededforproductionorsalesJITispopularbecausecarryingcostsareactuallymuchgreaterthanestimatedbecausewarehousing,handing,shrinkageandinvestmentcostshavenotbeencorrectlyestimatedTopic5:JITpurchasingsystems44EOQmodel

inJITPurchasingTheEOQmodeliscompatiblewithJITcarryingcostsarereduced.thecostofplacinganorderisdecreasingdueto:Establishinglong-termpurchasingagreementssoadditionalnegotiationisnotnecessarywitheachpurchase.Placingpurchaseorderselectronically,reducingthecostofplacinganorder.Usingpurchase-ordercardswithpre-setdollarlimits.Thesecardsavoidtraditionallabor-intensiveprocurementapprovalprocedures.Topic5:JITpurchasingsystems45Relevantcosts

inJITPurchasingJITpurchasingisnotguidedsolelybytheEOQmodel.TheEOQmodelisdesignedtoemphasizethetrade-offbetweenrelevantcarryingandorderingcosts.Inventorymanagementalsoincludespurchasingcosts,stockoutcosts,andqualitycosts.Topic5:JITpurchasingsystems46Relevantcosts

inJITPurchasingCompaniesimplementingJITmustchoosetheirsupplierscarefullyanddeveloplong-termsupplierrelationships.Relevantcostsofpurchasingneedtobeconsideredinthisdecisioncostssuchasinsurance,materialshandling,breakage.Thesecandifferamongsuppliers.Topic5:JITpurchasingsystems47Relevantcosts

inJITPurchasingTopic5:JITpurchasingsystemsExhibit20-548Computerillustration4-1:

EconomicorderquantityinaJIToperationWorkthroughthefollowingcomputerillustration.Topic5:JITpurchasingsystems49Topic6:

BackflushcostingLearningObjectivePreparejournalentriesforinventorytransactionsusingbackflushcostinginaJITenvironment.RequiredreadingChapter20,pages576-584,from“BackflushCosting”upto“ProblemsforSelf-Study”50NormalandstandardcostingsystemsTraditionalnormalandstandardcostingsystemsusesequentialtracking,whichisasystemofrecordingjournalentriesinthesameorderaspurchasesandprogressinproduction.Suchsequentialtrackingsystemhasfourtriggerpoints,orstages,inthecyclefrompurchaseofdirectmaterialstosaleoffinishedgoodsatwhichjournalentriesaremadeintotheaccountingsystem.Topic6:BackflushcostingPurchaseofdirectmaterialsProductionresultinwork-in-processCompletionofgoodFinishedunitsofproductSaleofFinishedgoodsABCD51BackflushCostingInadoptingjust-in-timeproductiontechniquestheabsenceofinventoriesmakeschoicesaboutcost-flowassumptionsorinventorycostingmethodsunimportant.Allmanufacturingcostsoftheaccountingperiodflowdirectlyintocostofgoodssold.Thiscanpermitasimplifiedcostingsystem.Topic6:Backflushcosting52BackflushCostingBackflushCostingomitsrecordingsomeorallofthejournalentriesrelatingtothestagesfromthepurchaseofdirectmaterialstothesaleoffinishedgoodsSincesomestagesareomitted,thejournalentriesforasubsequentstageusenormalorstandardcoststoworkbackwardto“flushout”thecostsinthecycleforwhichjournalentrieswerenotmadeInajust-in-timesystemwhereinventoriesareminimal,backflushcostingsimplifiesthecostingsystemwithoutasignificantlossofinformation.Topic6:Backflushcosting53Threeapproaches

PanelA:Threetriggerpointswithentriesatpurchaseofdirectmaterials,completionoffinishedunitsofproduct,andsaleoffinishedgoods.PanelB:Twotriggerpointswithentriesatpurchaseofdirectmaterialsandsaleoffinishedgoods.PanelC:Twotriggerpointswithentriesatcompletionoffinishedunitsofproductandsaleoffinishedgoods.Topic6:BackflushcostingPurchaseofdirectmaterialsProductionresultinwork-in-processCompletionofgoodFinishedunitsofproductSaleofFinishedgoodsABCD54General-ledgeroverview_PanelA

Topic6:BackflushcostingRawMaterialcontrolConversionCostscontrolFinishedgoodscontrolCostofgoodssold1)Recorddirectmaterialpurchased.1)300,000ConversionCostsalloocated2)Recordincurrenceofactualconversioncostsduringperiod.2)310,0003)Recordfinishedgoods(budgetedstandardcost)completedduringperiod.3)320,0003)220,0003)540,0004)Recordthesalesfortheperiod.4)486,0004)486,0005)Recordunder-orover-allocatedconversioncosts.5)320,0005)310,0005)10,000Theoutputtriggerpointreachesbackandpullsthestandarddirectmaterialcostsfrominventory.Bal.80,000Bal.54,0006)476,000TheeliminationofthetypicalWork-in-processaccountreducestheamountofdetailintheaccountingsystem.55General-ledgeroverview_PanelB

Topic6:BackflushcostingInventorycontrolConversionCostscontrolFinishedgoodscontrolCostofgoodssold1)Recorddirectmaterialpurchased.1)300,000ConversionCostsalloocated2)Recordincurrenceofactualconversioncostsduringperiod.2)310,0003)288,0003)198,0003)Recordthesalesfortheperiod.3)486,0004)Recordunder-orover-allocatedconversioncosts.4)288,0004)310,0004)22,000Bal.102,0006)508,000Thesaletriggereliminatesamanager’sincentivetoproduceforinventorybyrecordingconversioncostsasaperiodcostsinsteadofinventoriablecosts.(＝22×9,000)(＝32×9,000)56General-ledgeroverview_PanelC

Topic6:BackflushcostingRawMaterialcontrolConversionCostscontrolFinishedgoodscontrolCostofgoodssoldConversionCostsalloocated1)Recordincurrenceofactualconversioncostsduringperiod.1)310,0002)Recordfinishedgoods(budgetedstandardcost)completedduringperiod.2)320,0002)540,0003)Recordthesalesfortheperiod.3)486,0003)486,0004)Recordunder-orover-allocatedconversioncosts.4)320,0004)310,0004)10,0002)220,000(AP)6)476,000Bal.54,00057SpecialConsiderationsinBackflushCostingBackflushisnotrestrictedtocompaniesusingJIT.Acompanywithshortmanufacturingleadtimeorverystableinventorylevelsmayusebackflushwithacceptableresults.BackflushcostingdoesnotnecessarilycomplywithGAAPHowever,inventorylevelsmaybeimmaterial,negatingthenecessityforcomplianceBackflushcostingdoesnotleaveagoodaudittrail–theabilityoftheaccountingsystemtopinpointtheusesofresourcesateachstepoftheproductionprocessTopic6:Backflushcosting58Topic3:Supply-chainanalysis

andmanagementLearningObjectiveDescribetheroleofsupply-chainanalysisandmanagement.RequiredreadingChapter5,pages5-7,“ValueChainandSupplyChainAnalysisandKeySuccessFactors”Chapter20,pages571-572,“JITPurchasing,PlanningandControl,andSupply-ChainAnalysis”59Supply-ChainAnalysisThelevelofinventoryheldbycompaniesisaffectedbydemandandbuyingbehavioursofcustomersandbysupplyrelationshipswithdistributorsandmanufacturers.Supplychaindescribestheflowofgoods,services,andinformationfromtheinitialsourcesofmaterialsandservicestothedeliveryofproductstoconsumers(bothinside&outsidethefirm)Topic3:Supply-chainanalysisandmanagement60AValueChainImplementationTopic3:Supply-chainanalysisandmanagement61Supply-ChainAnalysisAnimportantpointinsupply-chainanalysisisforeachcompanyinthesupply-chainlinktoshareinformationandplanandcoordinateactivities.Increasedcoordinationwithinasupplychainhelpsreduceinformationasymmetryanduncertaintyandleadstoabetterworkingrelationshipwithfewerstockoutsituations.Topic3:Supply-chainanalysisandmanagement62Supply-ChainAnalysisManycompaniesarereluctanttoshareinformationforfearofbeingeliminatedfromthesupplychainasthesuppliersorcustomersintegratethecompany’sprocessesintotheirown,whichinturnscausesinefficienciesintheprocess.Topic3:Supply-chainanalysisandmanagement63Supply-ChainAnalysisSupplierevaluationsarecriticaltoJITPurchasingimplementationAcompanyshouldutilizeJITpurchasingonlyifactivitiesthroughoutthesupplychainareproperlyplanned,coordinated,andcontrolled.Topic3:Supply-chainanalysisandmanagement64SupplierEvaluationIllustratedTopic3:Supply-chainanalysisandmanagementExhibit20-6AnnualdifferenceinfavorofSontek$1,873(=183,380-185,254)65BenefitsofSupply-ChainmanagementSupply-Chainmanagementcanreduceuncertainty.Thereareanumberofbenefits:FewerstockoutsattheretaillevelReducedmanufactureofproductnotimmediatelyneededbyretailersFewermanufacturingordersthatneededtobeexpeditedLowerinventoriesheldbyeachcompanyinthesupplychainTopic3:Supply-chainanalysisandmanagement66Topic4:

Materialrequirement

planningandjust-in-time

productionsystemsLearningObjectiveDescribematerialrequirementplanning(MRP)andjust-in-time(JIT)productionsystems.RequiredreadingChapter20,pages573-573,from“InventoryManagementandJITProduction”upto“BackflushCosting”67InventoryManagementandMaterialsRequirementsPlanningMaterialsRequirementsPlanning(MRP)a“push-through”systemthatmanufacturesfinishedgoodsforinventoryonthebasisofdemandforecastsTopic4:Materialrequirementplanningandjust-in-timeproductionsystems68MRPTakesintoaccountleadtimetopurchasematerialsandtomanufacturecomponentsandfinishedproductsSetsamasterproductionschedulespecifyingquantitiesandtimingofeachitemtobeproducedTheoutputofeachdepartmentispushedthroughtheproductionlinewhetheritisneededornot“PushThrough”mayresultinanaccumulationofinventoryTopic4:Materialrequirementplanningandjust-in-timeproductionsystems69MRPInformationInputsMRPusesthreeinformationsourcestodeterminethenecessaryoutputsateachstageofproductionDemandforecastsoffinalproductsAbillofmaterialsdetailingthematerials,components,andsubassembliesforeachfinalproductThequantitiesofmaterials,components,andproductinventoriestodeterminethenecessaryoutputsateachstageofproductionTopic4:Materialrequirementplanningandjust-in-timeproductionsystems70MRPUnderanMRPsystem,inventorymanagementcanbeachallengeasthesystemmaynotcollectandupdateinventoryrecords.Themanagementaccountantmustmaintainaccuraterecordsofinventoryanditscosts.Themanagementaccountantmustalsoestimatesetupanddowntimecostsforproductionruns.CostsofsettingupaproductionrunaresimilartoorderingcostsintheEOQmodel.Topic4:Materialrequirementplanningandjust-in-timeproductionsystems71InventoryManagementand

JITProductionJIT(Lean)Productiona“demand-pull”manufacturingsystemmeaningthatdemand,ratherthanforecastsdriveproductionmanufactureseachcomponentinaproductionlineassoonasandonlywhenneededbythenextstepintheproductionlineDemandtriggerseachstepoftheproductionprocess,startingwithcustomerdemandforafinishedproductandworkingbackwardDemandpullsanorderthroughtheproductionlineTopic4:Materialrequirementplanningandjust-in-timeproductionsystems72Just-In-TimeProcessingGoodsManufacturedGoodsShippedtoCustomerSusan’sSoccerSneakersSalesOrderReceived100pairsofsneakers...gotit!Sendrubberandshoelacesdirectlytothefactory.Topic4:Materialrequirementplanningandjust-in-timeproductionsystems73JITProductionGoalsJITseekstoMeetcustomerdemandinatimelybasis,withhigh-qualityproducts,atthelowestpossiblecost.HowaJITsystemaccomplishesthesegoalsmaynotseemreadilyapparenttosomeonenotfamiliarwithJIT.Topic4:Materialrequirementplanningandjust-in-timeproductionsystems74JITProductionF