6. Decision-Making Tools

Introduction

Businesses spend money to make money. Since companies do not have unlimited access to cash, some of the most important business decisions surround capital expenditures. Capital expenditures are the allocation of money to undertake projects to generate future cash flows for the company. Typically, these are long-term projects and are expensive. It is important that the management of a company select projects with the highest payoffs and the greatest chance of success. Capital budgeting encompasses evaluating, comparing, and selecting projects.

Historically, supply chain and operations managers have been asked to reduce costs wherever possible. Therefore, it is no surprise that we are traditionally classified ...

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