All right, it's time for part two of test your knowledge. Question one, what is the value stream? Is it a, the most valuable customers of the business be the most profitable products or services of the business? See a business process and everything that happens in it from customer order to delivery or D, the rate at which business attracts new customers. Which of these is a value stream? Well, that's a fairly easy one to start off with the right answer is see a business process and everything that happens in it from customer order to delivery.

Question to why should we manage by value stream a It enables us to focus on customer value and work to improve it be it allows us to assign people to the process that the best skilled for C at allow senior management to judge the person performance of the process and line managers and D It enables us to calculate the profitability of products and services and eliminate the least profitable. Okay a couple of seconds to think why should we manage by value stream? The answer is a enables us to focus on customer value and work to improve it. Question three, what sort of issue would constrain the capacity of the value stream? Is it a supplier managed inventory? be highly trained staff see planned preventative maintenance or D unreliable equipment?

I'm sure you don't need long to think on that one. A, B, and C will all help improve the capacity of the value stream. It's D unreliable equipment, which will constrain the capacity of the value stream. Alright, Question four. What tool of Lean Accounting is used? For weekly performance management and improvement is a the wicked score be the value stream profit and loss account.

See the balanced scorecard or D the box score a couple of seconds to think there and the answer is D, the boxcar. Moving on to question five, which of the following is a correct statement for lean decision making? A we might accept a decision which generates a negative contribution, if it will improve operational performance and create available capacity for future profitable opportunities. Is it b we will accept any decision which generates a positive contribution. Even if it damages the operational performance of the value stream is C. We will reject any decision which is contribution neutral, even if it provides benefits for operational purposes. Once or is it D, we will accept any decision that brings new customers to the business.

A couple of long sentences there to have a think about which of the following is correct in terms of lean decision making? And the answer is A, we might accept the decision which generates a negative contribution, if it will improve operational performance and create available capacity for future profitable opportunities. The aim of improvement in Lean Accounting is to improve the operational performance of the process improves the flow and you create capacity for future profitable work. So, the impact on flow and capacity is more important than any impact on contribution in the short term. Question six. Why does Lean Accounting not to like accounting transactions?

A they are difficult for the people who work in the process to answer Stand be they are too focused on cost rather than measures of flow and stability. See, they add no value for customers of the business, D they are a constraint to the flow of work through the value stream. And the answer to question six is see the Add no value for customers or the business. And we'll look at why in the next question. It's a question seven then why do accounting transactions not to provide good process control? Is it a the information they provide is too complicated for most staff to understand?

B the information they provide is available too late for timely action. C costing information in the accounting system is almost never up to date, or D. The system is too paper based. Give it a couple of seconds to mull over and the answer to question seven is be the information they Provide is available too late for timely action. Question eight. Why does Lean Accounting focus on customer value? Is it a improving customer value improves the flow of work through the value stream be the most profitable customers and new customers?

See, improving customer value increases demand or D, the primary goal of management is to increase customer value. And the answer to question eight is see improving customer value increases demand. And if we're working to improve the process and thereby create capacity for new work, then we need to improve customer value to increase demand to fill the space that we've created and therefore generate more profit. Question nine which of the following formula does Lean Accounting hold to be true? A more capacity plus more investment equals Increased profitability be greater demand plus increased flow equals more capacity. See, greater demand plus more capacity equals increased flow, or D, greater demand plus more capacity equals increased profitability.

Okay, I'll give you a couple of seconds to kind of cogitate on these formula. And the answer to question nine is the greater demand plus more capacity equals increased profitability. Right question 10. When the data from lean performance measures is presented as a time series, how do we know that the cost of operating the process is likely to be stable? Is it a the data will be clustered closely around the mean? Be the data will be highly spread indicating flexibility in meeting performance challenges.

See the data Meet the targets set by the customer. Most of the time, or D performance targets reflect the voice of the customer. The answer to question 10 is that we will know when the cost of operating the process is likely to be stable. If the data is clustered closely around the mean, that means there's not much variation in the process. And therefore there'll be relatively little variation in the cost of operating the process. Now we have a bonus question question 11.

What possibly is the single most important lesson from this course? Is it a that cost plus pricing is never the profit maximizing price be that presenting data in the time series provides far more information about the stability of and issues in a process than a traffic light rag report. See that improving the flow of work through a business process. Create Available capacity that can be used for more profitable work, or D, the data from lean performs measures represents the voice of the process. Have a think there? What is the most important lesson from this course?

Well, the first thing to tell you if your question 11 is that all of these statements are true. But in the context of this course, about Lean Accounting, throughput accounting and the Theory of Constraints, then the correct answer is C, that improving the flow of work through a business process creates available capacity that can be used for more profitable work. But as I said, the other answers are also true. When I come to do a course on pricing, we'll learn that the cost plus price is never the profit maximizing price. When we're looking at interpreting performance data as a time series, as we touched on in this course, it does provide much more information about the story Have the process and any issues in the process, then a traffic light report. And finally, the data from lean performance measures is called the voice of the process.

But that's not the most important lesson from this course. Right That's wraps us up then for the quiz for public