Backflushing exampleIn a machine factory, chains are manufactured. A chain is made of 40 chain links. A machine produces 10 chains in a minute. You release a production order for 300 chains. The estimated production cost is:
Evidently, the operation to produce the chain cannot start before the chain links have been issued from the warehouse to the shop floor. However, if you apply backflushing, you do not record the physical issue of materials in the system. When the production order is finished, 295 chains are reported completed, and 10 chains are reported rejected, because they were not put together correctly. The quantity to backflush is 305 (= 295 + 10) chains. The actual production cost is recorded as:
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