Efficiency & Cost of Production
Write 600-800 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas:
Because the decision about relocating manufacturing operations to the United States is so important, the board of directors at
AutoEdge continues to systematically discuss every aspect of the situation.
The following week, CEO Lester Scholl meets you for coffee to discuss next week's board meeting.
"I'm hearing good things about you," he says. "Ingrid and George tell me you've been very responsive and helpful."
"That's good to hear," you say. "I've enjoyed working with them."
"We're both busy, so I'll get right to the point," he says. "One of the main objectives of any business is to be efficient. Without efficiency, the company is essentially losing money. Am I right?"
"Absolutely," you say.
"What must AutoEdge do," he says, "to obtain economies of scale with production? How do we know that it has achieved economies of scale? Conversely, how do we know if it is achieving diseconomies of scale?"
"That's a good question," you say. "I can understand why you ask."
But before you can respond, Lester's cell phone rings. After a minute, he ends the call and stands.
"I have to get back to the office to handle an emergency," he says. "Would you send me an e-mail with an answer to my questions, please?"
"No problem," you say. "I'll get it to you before I leave work this afternoon."
"I appreciate it," he says. "Thanks."
Demonstrate how metrics such as valuation, economic profit, and related terms are measured and evaluated.
Explain the significance and implications of various economic theories pertaining to profit, consumer choice, demand and supply, forecasting and optimization.
Compare and contrast how production analysis is carried out and be able to evaluate production situations using economy of scale, elasticity and other analytic tools.