Lecture 8 Flashcards
How are learning curves used?
They utilise previous experience to optimise current projects, giving an idea of how performance changes over time, most crucially, this is related to the increase in workforce performance (speed up) once they are accustom to the task.
What is the market share?
The percentage of the market that the company owns. eg. is 15% of all the soap bought is from your company, yo hold 15% of the market share in this area
What is an alternative measure of profitability?
As market share increases so does profitability, which generally has more to do with the decrease in production costs rather than the increased margins.
What is the most common factor to observe in learning curves and why?
Labour Efficiency - as the time it takes to complete a task should drastically reduce after experience of the task, it will then plato
Key factors for learning curve consideration which result in greater efficiency and cost reduction are (3):
- Work specialisation
- Methods for improvement
- Innovative production processes
Selection of learning curves: project trend lines are generally plotted based on which three trend lines?
-product
-process
-functionalised segregations
which form the basis of smoothed out curves for overall interpretation and implementation
Price-cost relationships to the profit margin is rarely constant and has complex relationships, what is used to analyse this?
Price-Experience Curves - they are used to predict cut-off points and profit-margin opportunities to ensure success. (The more of something you make the lower the individual cost of each product due to bulk buying/ capital shared out more equally - therefore non linear)
When if trade-off analysis used and what is it?
- used when cost time/ and or performance estimates are not on target (regularly)
- a balance of sacrifice to maximise success
Learning curves are particularly useful for the development of which 3 things?
- pricing strategy
- illustrating financial benefit of a strong environmental input
- comparisons of competitors or alternative processes
Companies actual strategy depends upon 5:
-product life-cycle stage
-companies market position and financial position
3- competitors available resources and market position
4- time horizon
5-public perception of the company profile
Trade-off decision process (4):
- recognition and understanding different objectives
- complete review of project objectives
- analysis of project environment and status
- identification of alternative courses of action
Often performance has strict constraints in which case cost and time are sacrificed (4) methods of trade off:
- additional resources brought into the project
- redefinition of the scope of work and/or deletion of certain work tasks
- reorganisation of resources in order to speed up the critical path of project
- changing the logic diagram of the project to allow schedule changes
when there are stringent cost and time constraints performance is often traded-off, what is often the problem with this?
-there are hidden additional costs by reducing performance such as long-term maintenance
For Project-driven industries the trade of process is usually what, early and late in the process?
- early - usually cost will be sacrificed
- later - usually time and performance are sacrificed as cost constraints become more stringent
For Project-driven industries the trade of process is usually what?
-usually time will be sacrificed in this scenario, although banks typically sacrifice costs
