Operations Research Overview

Questions and Answers

What is the primary purpose of quantitative techniques in decision making?

To develop new product designs

To identify the best marketing strategies

To facilitate management decisions for optimization (correct)

To enhance customer service experience

Which of the following topics is NOT typically included in studies related to operations research?

Transportation modeling

Psychological theories of consumer behavior (correct)

Game theory

Network analysis

What method is commonly employed for project planning and scheduling in operations research?

Demand estimation

Statistical sampling

PERT and CPM (correct)

Game simulation

Which of the following is an application of the learning curve in decision making?

Estimating production costs as experience increases Signup and view all the answers

What is the primary focus of managerial economics in the context of operations research?

Facilitating cost management and allocation Signup and view all the answers

What is the primary goal of calculating costs for each activity in the value chain?

To understand which activities impact revenue generation Signup and view all the answers

Which of the following is indicated as one of the most expensive components in the cost structure of a business?

Staff salaries Signup and view all the answers

What does a value chain analysis help a company identify?

The breakdown of costs associated with activities Signup and view all the answers

How can a company potentially reduce rent costs according to the content?

Negotiate their contract or relocate Signup and view all the answers

What is one alternative suggested for reducing staff costs?

Evaluate scheduled staff hours and cut during slow periods Signup and view all the answers

Why is it important to have an accurate picture of every single cost in the value chain?

To understand total revenue generation clearly Signup and view all the answers

What element made up only a small fraction of the final cost in the example of a cup of coffee?

Coffee itself Signup and view all the answers

What benefit does cross-collaboration among departments provide during cost analysis?

It encourages comprehensive mapping of logistics and costs. Signup and view all the answers

What primary strategy do Low-Cost-Carriers typically follow?

Cost Leadership Signup and view all the answers

What is the focus of Strategic Cost Management (SCM)?

Aligning costs with company business strategies Signup and view all the answers

How many stages are there in the process of Strategic Cost Management?

Four Signup and view all the answers

Which of the following statements most accurately describes the goal of Strategic Cost Management?

To improve product/service quality while managing costs Signup and view all the answers

What role does Strategic Cost Management play in a firm's strategy formulation?

It provides information about sources of competitive advantage Signup and view all the answers

In the context of SCM, what is a key requirement for effective communication?

Clear strategy across the entire organization Signup and view all the answers

What characterizes the decision-making structure in Strategic Cost Management?

Integration of cost information with decision-making Signup and view all the answers

Which aspect is NOT associated with the necessity of Strategic Cost Management?

Focus primarily on reducing production costs Signup and view all the answers

What was a key factor that contributed to the Model T's market share increase from 9% in 1908 to 61% in 1921?

The implementation of mass-production techniques Signup and view all the answers

How did Apple differentiate its iTunes service in 2003?

By allowing the purchase of individual songs at reasonable prices Signup and view all the answers

What innovation did Netflix introduce in the 2000s?

Mail-order video rentals and later streaming video Signup and view all the answers

What does 'cost control' primarily involve?

Regulating operating costs through executive actions Signup and view all the answers

Which aspect was NOT a characteristic of the automobile industry during the early 1900s?

Reliability and affordability of cars Signup and view all the answers

What is the significance of a 'blue ocean' in the context of Apple's iTunes?

It describes a new market created by finding unoccupied opportunities Signup and view all the answers

What challenge do new companies face when trying to enter the video subscription model after Netflix's success?

Facing a competitive and crowded marketplace Signup and view all the answers

Which statement accurately describes the primary focus of cost accounting?

Tracking and regulating operational expenses Signup and view all the answers

What are the two elements that must be considered when improving the value of a product?

Utility and esteem value Signup and view all the answers

Why does a luxury car have a higher price compared to a basic small car despite serving the same function?

It possesses a higher esteem value. Signup and view all the answers

In the context of value analysis, what is meant by 'functionality'?

The ability of a product to perform its intended use Signup and view all the answers

How does switching from metal to plastic affect the value of a kettle in terms of functionality?

It maintains its functionality while reducing production costs. Signup and view all the answers

What could happen if a company producing metal kettles fails to adapt its design process?

It may struggle to compete against cheaper alternatives. Signup and view all the answers

What is the importance of value analysis in relation to customer satisfaction?

It aims to enhance the functional worth for customers. Signup and view all the answers

What strategy should a company adopt if it aims to reduce production costs?

Identify and eliminate unnecessary costs. Signup and view all the answers

Regarding the value of ownership, what does esteem value primarily refer to?

The personal satisfaction derived from ownership. Signup and view all the answers

Study Notes

Quantitative Techniques in Decision Making

Quantitative techniques equip individuals with application-oriented knowledge for management decisions focusing on optimization.
Techniques discussed include Linear Programming, Transportation, Assignment problems, Game Theory, Simulation, and Network Analysis.

Strategic Cost Management (SCM)

SCM focuses on managing costs and enhancing the strategic posture of a firm.
It encompasses four stages: Formulation, Communication, Implementation, and Control of strategies.
Primary importance is given to improving product or service quality for target customers.

Cost Leadership vs. Product Differentiation

Businesses typically follow either Cost Leadership (e.g., Low-Cost Carriers) or Product Differentiation strategies (e.g., Apple).
Cost Leadership aims to provide quality products at low prices, while Product Differentiation allows premium pricing for distinctive features.

Role of Cost Management Techniques

Strategic Cost Management helps identify, accumulate, measure, analyze, interpret, and report cost information to achieve strategic objectives.
It enhances internal decision-making related to resource allocation, competition management, and cost control.

Value Chain Analysis

Understanding the value chain helps businesses evaluate costs associated with primary and support activities.
An example illustrates that a significant portion of the cost goes to elements like rent and staff rather than raw materials.

Case Studies Demonstrating Strategy

Ford’s Model T resulted in a significant market share due to mass production, revolutionizing the automobile industry.
Apple’s introduction of iTunes provided users with a legal, convenient platform for purchasing music, creating new revenue streams.
Netflix reinvented the entertainment market by pioneering subscription-based streaming models, transforming consumer engagement.

Cost Control and Cost Reduction

Cost Control refers to the regulation of operational costs via executive decisions based on cost accounting.
Emphasis on adding value through functionality: the utility versus esteem value must be considered when pricing products.

Value Analysis (VA) Approach

Focuses on managing product functionality to enhance value for customers while reducing costs.
Example of electric kettles illustrates how switching materials can maintain functionality and lower production costs without sacrificing value.
Companies need to identify unnecessary costs to stay competitive against lower-cost alternatives.

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Description

This quiz explores various aspects of Operations Research, including Linear Programming, Transportation, Assignment problems, Game Theory, and Simulation techniques. Understand critical concepts that aid in managerial decision-making through quantitative techniques.