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Unformatted text preview: Key points for the Operations Advantage • Operations vs. sales (marketing) o Generate demand vs. provide the supply – integration key • Elements involved in different types of operation o Get it done – Can someone else do it better? • People and processes produce products o Connection to HR and organization’s structure • Decisions to Consider o Capacity, make or buy, subcontracting, scheduling, contingencies, inventory, supplier relationships • Control • Metrics – what to focus on for success • Goals – what customer wants – quality, service, price (cost) Key points from last class • Concept of contribution – not just breakeven o Contribution margin – with units (P-VC) o Contribution rate – with totals (1-VC/Sales) Used when dealing with totals • Applications o When to calculate breakeven and what to do with it Margin of safety, and interpreting that margin o Make a decision between two alternatives Decision point o Making a decision that would affect costs and/or volumes Process • Quantitative – INCREMENTAL contribution vs. incremental fixed • Qualitative issues • What would you want to calculate to help make your decision? o Incremental changes o Breakeven o Margin of safety Clicker Questions 1. If you are considering introducing a new product to your product line, what would you want to calculate to help make your decision? Answer: All of the following o the incremental contribution relative to the incremental fixed costs o The breakeven relative to the market and your projected share o The margin of safety given your projected sales 2. If you are able to produce in another country with a lower age rate that would decrease your variable cost from $10 to $5 per unit, should you drop your price...
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This note was uploaded on 01/11/2012 for the course BIOL 2021 BIOL 2021 taught by Professor Pat during the Fall '10 term at York University.
- Fall '10