W4 - Applied ST Decision Making

Question 1

What is contribution?

Answer 1

Looks at revenues ans variable costs to help make short term decisions

Question 2

How to decide which products we should make?

Answer 2

Products making a positive contribution (Selling price > Variable cost)

Question 3

Special Orders

Answer 3

If the special order makes a positive contribution - accept it

Question 4

Problems of special orders

Answer 4

-Negative customer reactions: price discrimination
-Negative competitor reactions: may try to match price / out price

Question 5

Resource constraint examples

Answer 5

-Scarcity, finance shortages, materials, skilled labour, space, equipment

Question 6

Qualitative factors - customers

Answer 6

-Inclusion/exclusion of a product in range & interdependance (betwen products/combined loyalty)

Question 7

Qualitative factors - Employees

Answer 7

-Closure/Relocation decisions require sensitivity
-Trade union responses

Question 8

Qualitative factors: competitors

Answer 8

Retaliation?

Question 9

Qualitative factors: Legal Constraints

Answer 9

Health & safety issues

Question 10

Qualitative factors: Suppliers

Answer 10

-Quality/Promptness/Reliance of supplier
-Credit facilities
-Afert sales service? Good relationship?