Management Accounting Case Book

Creating a Lean Enterprise: The Case of the Lebanon Gasket Company

Peter Brewer, Miami University; Frances Kennedy, Clemson University

THIS CASE TELLS THE STORY OF THE TRANSITION OF A TRADITIONALLY MANAGED MANUFACTURING FACILITY to a lean facility. It describes the difficulties using volume-based standard costing methods to manage a plant that is trying not to produce excess volume. The case prompts discussion on traditional income statement reporting versus value stream costing, product-related decisions, capacity analysis, and performance measurement alignment with strategy.

This case is appropriate for upper-level undergraduate and MBA/graduate courses. It provides students an opportunity to contemplate the role of accounting within a lean organization. Students will be able to engage in rigorous quantitative and qualitative analyses based on the facts in the case. Furthermore, the case provides an excellent platform for students to enrich their presentations through outside research into the principles of lean production and lean accounting.

Keywords: lean manufacturing; lean accounting; performance measurement; strategic alignment.

Creating a Lean Enterprise: The Case of the Lebanon Gasket Company

Peter BrewerMiami University

Frances KennedyClemson University

INTRODUCTION

The Lebanon Gasket Company (LGC) hired Tom Walsh as the plant manager of its Topeka, Kansas, facility in January 2004. LGC was impressed by Walsh’s 20 years of experience as a manufacturing engineer, ...