OPM 200 Lecture Notes - Lecture 4: Fixed Cost, Variable Cost, Ikea

• School: Drexel University
• Department: Operations Management
• Course: OPM 200
• Professor: Min Wang

Document Summary

Today"s topics: break-even analysis, process analysis, document a process, time study, data analysis tools (basics) Expect: some interaction with customer is necessary, but it often has negative affects on process performance. Accommodate: the better customer interactions are accommodated in the process design, the more efficient and effective the process. Trade-off: position the process with the right combination of cost . Example: ikea and how the last of the process is the customer putting the furniture together themselves and how each customer might have a different skill level in putting things together. Focus on depth of product line rather than breadth. Focus can be: customers, products, service, technology. Break-even quantity: the volume at which total revenues equal total costs. Break-even analysis: analysis to compare processes by finding the volume at which two . Variable cost: cost that varies directly with volume of output. Fixed cost: cost that remains constant regardless of the output volume.