The primary objective of a good inventory management system is to keep the inventory costs to the minimum. The three major elements of inventory cost are as below: a) Ordering Cost b) Storage Cost (cost of carrying inventory) c) Stock-out Cost (cost of lost sales due to inventory shortages) Several inventory models have been built […]

## Relevant Cost and Decision Making – An example

Creative Designing plc a printing company is seeking to increase its business by winning work from new customers. It has received an order from a multinational national company for printing New Year Greeting Cards. The technical team of Creative Designing has given a detailed report on the resource requirement for the order. The total cost […]

## Sales Mix Decision with Key factor and multiple constraints

A good problem is the one that helps students understand concepts very well. As requested, I am posting first problem in Decision making process (more problems with solutions will follow). This problem involves finding an optimal sales mix within the given constraints. Though on one side the existence of multiple constraints makes it a challenging […]

## CVP Analysis

The objective of a business is to earn and maximize profits. Profit is a relationship between sales and cost which can be mathematically expressed as below: Profit = Selling Price x Quantity Sold – Cost Therefore the key factors that affect the profit of a business are a) Selling price of the products b) Volume […]

## Joint Products and By-products

In a common manufacturing process if the output is more than one type, the resulting products are called a) Joint products b) By products There is no precise criterion to distinguish between joint products and by-products. It could be made based on several factors like the company’s policy, sales value, market demand, profitability etc. The […]

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