INFLUENCES - QUALITY AND COST INFLUENCES

Question 1

COST

Answer 1

o In businesses, cost refers to the expenses that the business takes on in an effort to produce and sell a good or service
o It shapes the final price that is charged to consumers.
o Cost is from the businesses perspective
o Price is from the consumers perspective

Question 2

Total cost=

Answer 2

fixed costs+variable costs

Question 3

Total revenue

Answer 3

price ×quality

Question 4

Price

Answer 4

total revenue>total costs

Question 5

COST BASED COMPETITION

Answer 5

o Cost based competition refers to the impact that a number of businesses battling within an industry has on the pursuit of probability.
o If businesses are trying to compete on price (and still be profitable) they will not increase their price BUT rather try and reduce their costs.
o The desire to compete on the basis of cost has a significant impact in the operations function.

Question 6

All activities and processes will be tailored to minimise costs, impacts include;

Answer 6

 The quantity and quality of inputs sourced
 The location of suppliers and operations activities
 The quantity of outputs made
 The types of transformation processes used.

Question 7

QUALITY

Answer 7

o In businesses, ‘quality’ refers to how well designed, made and functional goods are, and overall degree of competence with which services are organised and delivered.

Question 8

QUALITY EXPECTATIONS

Answer 8

Quality is somewhat subjective and determined by customers views. making it a key influence

The expectations that customers have of businesses determine the way that products are designed, created and delivered to them.

Question 9

o The level of quality expected will impact operations processes in terms of:

Answer 9

 The type of inputs used
 The level of skill used in the transformation process
 The speed of production