Lecture 3 Flashcards
advantage of payback time
Relatively reliable indicator of the risk and easy to calculate
disadvantage of payback calculation
provides limited information about profitability (ex. in long term)
Net present value method
dynamic method, says if the benefits discounted at the discount rate will cover the investment
Method of internal rate
1) greatest amount of information for assessing profitability
2) where the discount rate is equal to the investment
risks in investment calculation
1) problems during commissioning
2) unexpected market price erosion
3) higher cost for development
4) drop in sales
how to consider risk in investment?
1) higher benefits ( shorter payback time, higher rate of return)
2) higher invest. cost (more annual expenses or development costs)
3) lower expected return (reduce annual benefits)
phases of life cycle
1) introduction
2) growth
3) maturity
4) saturation
5) declin
stages in each phase
1) product
2) pricing
3) Distribution
4) Promotion
address individual customer
talk directly
address anonymous market
surveys,calls,trends,statistics
specification profile
1) price
2) delivery time
3) quality
4) Environmental Impact
5) ease of use/install
6) function
Quality Function Deployment
1) Product
2) components
3) process
4) production
principles of target costing
1) market orientation
2) product cost control during process
3) target cost determination
problems with target costing
1) aligned forward-looking and long term
2) should allow compromises
3) goal set annually with constant improvement
approach to cost reduction
1) optimization of design
2) optimization of proces
3) optimization of value chain
