1. Provide the definitions of throughput, inventory and operational expense given in The Goal. How do they compare with the traditional definitions? Do you find them useful, and why? Throughput is the rate at which the system generates money through sales while inventory is all the money that the system has invested in purchasing things which it intends to sell.
So to be able to have a productive and successful business, business owners may want to look into maximizing their profits by way of the profit maximization concept. Profit maximization is when a company comes to a conclusion on the price and output level that will turn the maximum profit by using this particular process (Wikipedia). Granted there are many different approaches to this problem; however in this essay we will be considering the TR to TC method and the MR MC method. Tiffany C Wright expressed that the total revenue to total cost method is dependent on the fact that profit equals revenue minus cost. Total revenue equals price time’s quantity.
We need to improve our company and make it better with the money we earned. The working capital flows into a cycle called cash flow. This is a cycle into, around and out of a business. This is the business’s life and the task is to help keep the cash flowing to use the cash flow to generate profits. If a business is operating correctly then it should generate cash surplus.
• Describe the various types of organizational buyers and consumers and the factors that influence their purchasing decisions. Week Three: Marketing Strategy: Product and Price • Describe the relationship between differentiation and position of products or services. • Analyze the impact of the product life cycle on marketing. • Identify the appropriate price strategy that should be used in the development of the strategic marketing plan. Week Four: Marketing Strategy: Place and
Profit maximisation is assumed to be the objective of a firm, however there are other objectives that firms have, these include: revenue maximisation and sales maximisation. A firm aiming to maximise profit will aim to operate at output level Q, where Marginal Revenue (MR) is equal to Marginal Cost (MC). A process that companies undergo to determine the best output and price levels in order to maximize its return. The company will usually adjust influential factors such as production costs, sale prices, and output levels as a way of reaching its profit goal. There are two main profit maximization methods used, and they are Marginal Cost-Marginal Revenue Method and Total Cost-Total Revenue Method.
For these reasons, it is necessary to analyze the competitive advantage of the different options presented. • Strengths and Opportunities: The project evaluation should consider a SWOT analysis of each potential application, which allows identifying the strengths, opportunities, threats and weaknesses. This way, it is possible to choose the best option, which maximized the firm’s strengths and opportunities, while mitigating its threats and weaknesses. • Barrier to Entry: Also it is necessary to analyze the cost of enter to the industry. • Economic Benefit: What will be the earnings associated to the project.. • Customer Preferences Bernstein should recommend to the board the
Costing the activity is normally an in-between step in the distribution of overhead costs to products, to acquire more precise product cost information. However, occasionally the activity itself is the cost object of interest. Like for example, manager of a company might desire to know how much the company spends to acquire their raw materials, as input in a sourcing judgment. The activity of acquiring the raw materials incurs costs associated with negotiating prices with suppliers, issuing purchase orders, receiving fabric, inspecting fabric, and processing payments and returns. The steps to product costing are: 1) Identify the cost;
They then develop calculations to categorize these consumer patterns, and then use them as tools to provide insight into consumer reactions and possible future buying patterns. One of these tools is called the Price Elasticity of Demand. The Price Elasticity of Demand measures how consumer demand changes as a result of changes in price and it is represented as a coefficient. Elasticity is the main aspect of this coefficient and it represents how responsive or elastic consumers are to price fluctuations. This coefficient is calculated by dividing the change in demand by the original demand, and subsequently dividing that total by the change in price divided by the original price and the final
Study the demand elasticity for its products and discuss the availability of close substitutes for its products. How does that affect pricing decisions? Analyze the company’s profitability. Identify the economy or industry influences on its costs, operations, and profitability. Describe the competitive environment in which the firm operates, the distribution of market power, and the strategic behavior of the firm and its competitors.
In this task I was asked to tell Shafal the importance of cost, revenue and profits are all important to running a business. In section b I was asked I was asked to give examples what would happen if the Shafal does not bring revenue and she doesn’t make profit. Profit means the amount left from sales revenue after deducting the cost of producing the goods and services. The importance of profit for Shafal is that this canhelp the business to expand byreinvesting the profits in to the business. If she makes profit she can invest in new equipment or machinery e.g.