Question: Can you think of other areas within a company that would need to have some limits set on variances or payments? Why would it be beneficial to set those tolerance groups?
One of the areas a company might set limits set on variance and payments is the invoice amount received from the customer to the vendor. In this case, the following options such as the payments may be posted by slightly clearing the invoices and creating a residual item for the differences in payment and if the amount missing is more than the limit set hence compensation by the materials. The second option is when the payment made when clearing the invoice is a different amount and the difference in the amount is within the limit ser then the amount will be immaterial. In this case, the tolerance limit is the determinant of whether the amount missing is material or immaterial. The importance of this tolerance limit is that it will help to create tolerance groups. Additionally, this tolerance limit will help the business to group together customers and vendors who should be assigned the same tolerance limits.
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Tolerance limits can also be used in the specified quality of the manufactured products. Even if the quality control and reliability procedures have been used it’s still important to have a percentage within which the product can be said to be of the required quality. This method of using tolerance limits save the company’s resources as it is inexpensive and measures to ensure that the production will not fall outside the given specifications set in the tolerance limits. This tolerance groups will save the manufacturing company the resources to ensure that every product produced is the same in term of quality. Additionally, this will increase production as the products quality will be easy to determine using the tolerance groups set. Furthermore, this tolerance groups will save the company the cost of hiring more people to measure the quality of the products due to use of the tolerance groups to determine the quality of the products.
