The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

A firm makes a product whose contribution per unit is $2,000 and takes 100 hours to make (machine time). A component of this product has a marginal cost of $400 and takes 10 hours to make (machine time). This component could be purchased from an external supplier. Assuming the firm is working at full capacity, what is the maximum price that the company is willing to pay to buy the component from the external supplier?

QUESTION Canning Transport is to move goods from three factories (origins) to three distribution centers (destinations). Information about the move is given below. Solve the problem using the transportation simplex method and compute the optimal total shipping cost. Origin Supply A 200 B 100 C 150 Destination Demand X 50 Y 125 Z 125 Shipping costs Destination Origin X Y Z A 3 2 5 B 9 10 C 5 6 4 (Source B cannot ship to destination Z) Hint: 1: Check if dummy row/column is needed 2: Assign "M" if the shipping cannot done 3: Develop the transportation tableau 4: Phase I: Use MINIMUM COST METHOD to find the initial feasible solution 5: Check if the problem degenerate or not (if so add artificial cell, if not proceed to Phase II) 6: Perform MODI METHOD and STEPPING STONE METHOD to find the optimal solution

The demand equation for the deluxe marble kit produced by Whoville Marble Works (WMW) is p = 600 - 3q -0.01q² where p is the price WMW sets for the kit and q is the number of kits that they sell in a week. (a) Find the price that WMW should set to maximize their weekly revenue, the corresponding revenue maximizing output and their maximum weekly revenue. Round your answers to 2 decimal places. (b) Show how you know that the revenue you found in (a) is WMW's absolute maximum weekly revenue.

Answer 2

Question

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.

Answer 6

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.

Answer 7

Chapter 6, Problem 1CACQ

To determine

To explain: The optimal method of procuring inputs along with the primary advantages and disadvantages of acquiring inputs with examples.

Answer 8

Expert Solution & Answer

Explanation of Solution

An economic decision taken by the manager of the firm for the procurement of inputs in least possible costs. There are various approaches which can be used by the manager for producing the final product. These approaches are mainlydepending upon the nature of the product and the benefits get from the specialization. If the inputs used in the production of product have well defined and proper quality specifications and also requires highly specialized investments then the optimal procurement method would be 'contract'.

The advantages of this method are that the buyers and sellers both are tie up together because of the specific investment made to facilitate the exchange between them. Also, the chance of supplier taking the benefit of the manufacturer is nullified due to the enforcement of legal obligations.

The disadvantage of this method is that this will increase the opportunism which will increase the transaction costs as manufacturer would not able to take benefit of any fall in the market rate.

The example of this method can be explained as lets there is a local pizza manufacturer who need the dough for the base every morning at a particular time. As commitment for the production has already made, there is specialized investment which is made in advance. The supplier can threaten the manufacturer for not supplying the dough unless they will paythe payment. The supplier may also supply the dough with inferior quality. Hence, with this behavior of supplier,the manufacturer will find it so costly when supplier show opportunism.