Capacity Decision Of IVCN Based On Cost Control

With the rapid development of economy globalization,the cases of cross-border merger and acquisition by chinese enterprises have become more and more.In order to gain more international market share,these enterprises are promoting their competitive force and they have to change original production management mode.Production process reorganization in the group,capacity optimization and reducing production cost,these are the chief task after mergers.As one of the biggest dietary supplements manufacturers in the world,IVCN has several factories after frequent cross-border mergers and acquisitions in this context.How to arrange production to lower the cost among these factories becomes an urgent problem to be solved.This paper states related concepts of capacity decision and analyzes the theories of cost control and constraint.We studies the method of capacity decision in manufacturing industry.Firstly,the paper analyzed the production status of IVCN and finded out the production cost variances among these domestic and overseas factories.We identified the problem.Secondly,the paper built a cost model by applying theories of cost control and capacity decision,calculating capacity demand of annual sales budget,calculating practical capacity of these factories,proposing several optional schemes according to the difference.Finally,through the use of comprehensive budget management and cost allocation,the paper calculated the product costs and evaluated the optional schemes to make capacity decisions.According to the current situation of IVCN,the paper built a cost model to judge whether the practical capacity meet the needs of market.It can help the enterprise to choose a lower cost scheme and elimilate the production bottleneck.It also provides reference for sales department in business negotiations.