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Chapter 1: Q. 5-3PE (page 128)

The concept that relates to gaining efficiency through the full utilization of dedicated resources, such as people and equipment.

Short Answer

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Economies of scale

Step by step solution

01

Economies of scale

Economies of scaleare the increased costs that businesses achieve as a result of their size and are often quantified by the volume of output generated.

02

How economies of scale can be attained

Economies of scale can be attained if the company and its manufacturing units are expanded, it will have a maximum possibility of bringing down its expenses and it can also be achieved when more and more units of items can be manufactured on a wider level with less input used.

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Most popular questions from this chapter

In considering a capacity expansion we have two alternatives. The first alternative is expected to cost \(1,000,000 and has an expected profit of \)500,000 over the next three years. The second alternative has an expected cost of \(800,000 and expected a profit of \)450,000 over the next three years. Which alternative should we select, and what is the expected value of the expansion? Assume a 10 percent interest rate.

Why is it important to use earned value management (EVM) in the overall management of projects? Compare to the use of baseline and current schedules only.

What factors must be traded off in the product development process before introducing a new product?

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