22107 Lecture Notes - Lecture 11: Payback Period, Net Present Value
Document Summary
Relevant costs costs that differ among alternatives: pricing of a special order. Excess capacity must balance lt and st goals. Implications (can be detrimental - customer expectations) Order must be higher than variable costs incurred. = profits: outsourcing of labour or making/buying components. When a company is involved in multiple steps of value chain. Can control quality but suppliers = high quality & low price. Renting out empty space (due to idle capacity: adding or dropping a product, product line or service. Comprehensive range (avoid customers going to competitors: dealing with scare or limited resources. Usually short-term decisions/focus on cm due to constraints. Loosening constraints: add machines to ^ production available: theory of constraints. Identifies bottlenecks that limit production (e. g. outsourcing: decisions involved with selling or processing further. Decision: additional revenue > additional costs = process: capital investment decisions involving npv method. Time value of money (can invest now to gain interest)
