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Reducing total cost

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Please can you help me understand the concept below?

You work for a division of a textbook publisher that manages the company's economics textbooks. Senior managers have instructed you to find a way to reduce your division's total cost by 30 percent. Currently, your division handles three principles textbooks that are purchased by thousands of students every year and 25 textbooks in specialized areas of advanced economics, each of which is purchased by a few hundred students per year.
If your only objective is to reduce total costs as requested by senior management, would you recommend that your division stop publishing one or more principles books, one or more specialized books, or a mix of the two responses or are there other ways of researching management's goals? Discuss and explain your reasoning.

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The first thing I would say is that we should not stop publishing the three principles textbooks. This is because they are bought by thousands of students and, at least in principle, they cost us as much to make as a specialized textbook. If we are making a profit on any textbook, it is on those textbooks.

Now, if we have ...

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The expert examines reducing total costs for economic textbooks.

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Use simulations to analyze sales reports, income statements; describe a strategy


The SLP for this course involves participating in a simulation exercise. Unlike cases, which are static, simulations are interactive and you can see the results of your decisions. What's more, you can repeat the simulation to improve the quality of your decisions.While many simulations focus on just one general area of management (e.g. supply chain management or leadership), I have selected one that integrates several areas. In particular, you will be looking at income statements and sales reports. You will be making decisions about production, pricing, and investment.

Your first step is to come up with a strategy for how you will make these decisions.

1. Access the simulation site http://www.forio.com/pdasim.htm) We will be using the PDA Sim
2. Read the introduction, and study the Financials and the Market Information. Review the Decisions you will be asked to make, BUT DO NOT ENTER ANY DECISIONS! (If you have difficulty with impulse control, try one of the other simulations!)
3. Describe the strategy that you will use over the four years of the simulation, and defend why you think that strategy will work. In doing this you will want to consider what ratios will give you the information you need to make the best decisions. There are numerous ratios you can calculate with the data you have. First, you need to determine what types of ratios are going to be relevant to you. Obviously debt or liquidity ratios are not gong to be germane to this simulation. You are going to want to look at ratios that measure manufacturing efficiency and profitability. Some you will want to use to compare the entire firm's performance over time, others can best be used when applied to comparing the three products' performance or profitability. Begin by looking at

 unit price
 unit cost
 average revenue per unit
 break even

Explain what these ratios tell you and how you can use them to plan and evaluate the effectiveness of your strategy. You will definately need to use additional ratios that will give you more or better information - but at a minimum, you must address these in your paper.

You may append supporting materials, such as data tables and references. Be sure to EXPLICITLY draw on concepts and theories from the courses you have taken throughout the MBA program.

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