Operations Management Must Be Regarded Term Paper

High quality products lead to high prices for these products, which is not always convenient for all customers. Therefore, the quality level must be established in accordance with customers' requirements and purchasing power.

One of the most important factors that customers take into consideration when making a purchasing decision refers to the speed of delivery. Several studies have revealed that profits and market share are determined by speed of delivery.

Flexibility refers to the company's processes design, on the one hand, and to the company's ability to modify its facilities in order to produce new goods and services, on the other hand. This factor's importance is related to the duration of a product's life cycle.

Regarding service as a new competitive priority, companies provide value-added services, because this helps them gain competitive advantage.

3. The activity-based costing techniques consists in allocated overhead costs in actual proportion to the overhead consumed by the production activity. Activity-based costing technique was created from the need for a more clear costing technique.

Due to activity-based costing techniques, the allocation process has been generally refined. In other words, due to this technique, the overhead allocation process reflects more directly and more accurately the actual proportions of overhead involved in the production activity.

In addition to this, the activity-based costing technique is able to identify causal factors, like cost drivers and use them as means for allocating overhead. Such factors usually include: machine hours, beds occupied, computer time, flight hours, and miles driven. These factors are very important, since their selection influences the accuracy of overhead allocation.

Also, the activity-based costing technique is able to identify each activity and transaction as a cost driver. This way, overhead costs are assigned to products or jobs based on the number of separate activities required by the production process. This is why activity-based costing technique is also called transactions costing technique.

In addition to the advantages mentioned above, the activity-based costing technique, or the transactions costing technique, is able to identify overhead costs in a more accurate manner, which leads to a more accurate unit cost data…