CHAPTER 9

Operating Decisions

LEARNING OBJECTIVES

After reading this chapter, you should be able to answer the following questions:

images How is the operations function in manufacturing companies different from the operations function in service companies?

images Why is it important to calculate the cost of unused capacity? How is this information used in decision making?

images How can a company maximize profitability by altering the product mix and improving bottleneck operations?

images How does the analysis of relevant costs in operating decisions improve decision making?

images Why is it important to monitor and control the costs of quality and environmental costs within companies?

This chapter introduces the operations function in companies, and contrasts the different operating decisions faced by manufacturing businesses and service businesses. Operational decisions, such as capacity utilization, the cost of spare capacity, and the product/service mix under capacity constraints are considered. The relevant costs ...

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