ADMS 3510 Lecture Notes - Cross-Functional Team, Target Costing, Value Engineering

• School: York University
• Department: Administrative Studies
• Course: ADMS 3510
• Professor: Jamison Aldcorn

Document Summary

Pricing decisions, product profitability decisions, and cost management. Influences of costs vary among products, and pricing decisions differ greatly in both their time horizons and their contexts. The key to profitability is that companies sell units at the price a customer is willing to pay. Includes environmental costs of production, reclamation, recycling , and reuse of materials. 3 major influences on pricing decisions: customers: examine through their eyes-price, availability, customization and quality affect willingness to pay, costs: whether company follows throughput, variable and full absorption costing models. Abc systems provide superior information upon which to base pricing decisions: competitors: market characteristics: monopoly, oligopoly, perfect competition etc. Customer satisfaction, continuous improvement and dual internal/ external focus converge when it comes to pricing. Cost reduction includes all six value-chain business funcations from r&d to customer service- upstream and downstream costs. Relevant cost is important: depends on capacity available, alternatives uses of capacity, and the time horizon.