Operations Management-added value

Question 1

Define added value

Answer 1

Difference between actual price charged for a product/service and the actual cost of all components+assembly of the product/service

Question 2

What is the equation for added value?

Answer 2

Value added=selling price-cost of inputs

Question 3

What is the transformation process shown like?

Answer 3

INPUTS-TRANSFORMATION PROCESS-OUTPUTS

-what happens in a business-value added to inputs to create outputs

Question 4

What are some methods of adding value?

Answer 4

Building a brand
Delivering excellent service
Product features+benefits
Offering convenience-reduce costs

Question 5

What are some benefits of added value for the business?

Answer 5

Charge higher price-higher level of profit
Creates point of difference from competition
Can target chosen market more easily
Offer chance to make product more distinctive-unique selling point

Question 6

What are some benefits of added value for the stakeholders?

Answer 6

Consumers gain additional service+unique product
Suppliers able to supply more+chance to increase profits(if demand is high)
Shareholders benefit as profits increase-dividends increase

Question 7

What are some disadvantages of added value?

Answer 7

Increased price may restrict sales+revenue
Competition may make it harder to increase the price
Elasticity may make price increase difficult to be accepted within the market