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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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    Solution Preview

    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 ...

    Solution Summary

    The expert examines reducing total costs for economic textbooks.