Cost Management: Measuring, Monitoring, and Motivating Performance, 2nd Edition

CHAPTER 4

Relevant Information for Decision Making

In Brief

Managers make a variety of decisions about operations over the next period that include special orders, outsourcing, keeping or dropping a product line or customer, and constrained resource management. Identifying relevant information such as revenues and costs is an important part of making these decisions. However, strategic fit and other qualitative factors are also important, sometimes overriding cost considerations. Managers often weigh the business risk of alternatives when choosing the best course of action.

This Chapter Addresses the Following Questions:

• Q1 What is the process for identifying and using relevant information in decision making?
• Q2 How is relevant quantitative and qualitative information used in special order decisions?
• Q3 How is relevant quantitative and qualitative information used in keep or drop decisions?
• Q4 How is relevant quantitative and qualitative information used in outsourcing (make or buy) decisions?
• Q5 How is relevant quantitative and qualitative information used in product emphasis and constrained resource decisions?
• Q6 What factors affect the quality of operating decisions?

INTERNATIONAL OUTSOURCING: THE GOOD, THE BAD, AND THE CONTROVERSIAL

In recent years, many companies around the world have contracted with other organizations to perform manufacturing tasks or provide services ...