Question

Which of the following actions is likely to have the lowest initial cost in terms of its impact on other parts of the organization? Replace existing equipment with newer, more efficient equipment. Although this option entails substantial up-front investment, you’re sure that you can more than make up the difference in lower production costs. Lay off a portion of your workforce and then try to motivate everyone who’s left to work harder. This option also means selecting future hires from a lower-skill labor pool and paying lower wages. Begin buying slightly lower-grade materials, including hardwood, aluminum, vinyl, and nylon.

Answer 1

Answer:

Option 2, laying off some workforce will have the lowest initial cost.

Explanation:

In option 1 if an organization is going to replace existing equipment with the new machines there is a definitely high cost involved in it because we do know that modern and newer machines costs more.

In option 3, if we go for lower-grade quality, we may face lost sales, or sales return which will add up to our cost.

However, if we go for option 2. there is no upfront cost involved in this decision but rather our cost is saved.

Thus the organization must opt for the 2nd option in order to find the lowest initial cost.