Question

Which of the following companies is using cost drivers effectively to manage value chain activities cost efficiently?a. Company A orders large amounts of supplies and keeps them stocked until customer demand rises to prevent falling behind schedule in meeting customer needs.b. Company B uses just in time inventories and produces made to order products as and when customer demand rises.c. Company C collects customer requests first and starts processing them only after reaching a certain number.d. Company D routes all its supplies to a warehouse for storage and then transports them to individual factories for processing.e. Company E substitutes lower-cost inputs with high-quality, high-cost inputs to gain customer attention and loyalty.

Answer 1

Option B, Company B uses just in time inventories and produces made to order products as and when customer demand rises.

Explanation:

A cost leader is the business unit that induces the cost increase. Cost driver is any factor that causes an operation price transition.

Examples of cost drivers are: direct work hours of labour.

The analysis of the value chain can assist companies in different ways.

This can create changes within a company, the goods, services and links it offers to other companies and customers. The US Postal Service (USPS) describes that the aim of the assessment of the value chain is to "make value that exceeds the cost and produces gross margin."