Added value

• What are the 3 things the operations department responsible for?

  • concerned with aspects of the business which are directly linked to the fulfilment of customer orders
  • operations management takes inputs and processes them to form an output and distributes to the customer
  • operational objectives relate to how efficiently aspects of this process are achieved
• added value = selling price of outputs - cost of raw materials (inputs)
• profit per unit = selling price - total cost per unit (cost of sale + expenses : distribution/advertising)
• Definition of added value : the difference between the cost of purchasing raw materials (inputs) and the price for which the finished good (output) is sold for
• How can added value be increased?

  • purchasing cheaper raw materials
  • raising the price of the product
  • achieving brand status + USPs
  • offering additional services e.g a telephone helpline
  • improving customer access or convenience e.g drive-thru's