Which of the following phrases best describes product focus?
Options:
A. low volume, high variety
B. Finished goods are usually made to order.
C. Processes are designed to perform a wide variety of activities.
D. high fixed costs, low variable costs
E. high inventory
The Correct Answer Is:
D. high fixed costs, low variable costs
The correct answer is D. “high fixed costs, low variable costs” best describes a product focus in the context of manufacturing and operations. Let’s delve into why this is the correct answer in detail, and then we’ll explain why the other options are not the best fit for describing product focus.
D. High Fixed Costs, Low Variable Costs:
Product focus often entails investing heavily in fixed costs, such as specialized machinery, facilities, and infrastructure. These fixed costs are incurred upfront and remain relatively constant regardless of the production volume.
This is because the focus is on producing a specific product or a limited range of products with high precision and quality.
By concentrating on a single or limited set of products, the company can optimize its processes, design equipment tailored to these products, and ensure that production lines are highly efficient. This leads to economies of scale, improved quality control, and cost savings in the long run.
Low variable costs complement this approach. Variable costs are those that change with the level of production. In a product-focused environment, companies aim to standardize and streamline their processes to minimize variations and costs associated with producing different products.
This approach allows for efficient, high-volume production with a minimal need for customization. As a result, the variable costs associated with each unit produced are low.
In summary, a product focus prioritizes high fixed costs for specialization and efficiency in producing a limited set of products while simultaneously keeping variable costs low to maintain cost efficiency.
Now, let’s explain why the other options are not the best fit for describing product focus:
A. Low Volume, High Variety:
This option describes a scenario where a company produces a wide variety of products, but in relatively low volumes.
In contrast, a product focus typically involves higher volumes with limited product variety to achieve efficiency and economies of scale. The emphasis is on standardization and specialization.
B. Finished Goods Are Usually Made to Order:
This choice implies a make-to-order production strategy, which is not typically associated with product focus. Product focus aims to produce goods in anticipation of demand, allowing for cost efficiencies and mass production.
Make-to-order production is more characteristic of a customer-focused or custom manufacturing strategy.
C. Processes Are Designed to Perform a Wide Variety of Activities:
Product focus typically involves specialized and streamlined processes designed to produce a specific product or a limited range of products efficiently.
This option, on the other hand, suggests a more flexible or generalist approach, which is not aligned with the concept of product focus.
E. High Inventory:
While high inventory levels can be necessary in certain situations, such as just-in-time manufacturing, it is not a defining characteristic of a product focus.
In a product-focused environment, companies aim to minimize excess inventory by producing efficiently and to demand, thereby reducing carrying costs and waste associated with excess stock.
In conclusion, the best description of product focus is D, which emphasizes high fixed costs and low variable costs to achieve efficiency and specialization in the production of a limited set of products. The other options do not align with the key characteristics of product focus, as explained above.
Related Posts
- If demand is not uniform and constant, then stockout risks can be controlled by
- The short-term scheduling activity called loading
- Building a Culture of Compliance: Strategies for Long-Term Success - January 21, 2025
- Which best describes how an investor makes money from an equity investment? - January 15, 2025
- Informed consent is considered an application of which belmont principle? - January 15, 2025