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CMA Intermediate · Operations Management and Strategic Management · Lean Operations and JIT

According to the five principles of lean thinking, what should be the starting point for defining value?

Value must be defined from the customer's perspective, meaning what the customer is willing to pay for. This is the first lean principle, followed by mapping the value stream, creating flow, establishing pull and pursuing perfection. Starting from internal costs or capacity would hide waste rather than expose it.

  1. AThe cost of the firm's existing machinery
  2. BThe customer's perspective on what they are willing to pay forCorrect
  3. CThe production manager's estimate of capacity
  4. DThe competitor's price list

Explanation

Lean thinking begins by specifying value from the customer's standpoint. Only then are the value stream mapped, flow created, pull established and perfection pursued. Internal capacity or cost views start from the producer's side, which lean rejects.

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