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COHORT NAME
& Group No:
CEO:
Group Members:
Niraj Krishna
Anjana Sharma, Bhavana Menon,
Ashutosh Bhardwaj, Mohd. Aariz Ali, Kasi V.
Inventory cost
Administrative cost
Distribution cost
They have not been able to calculate the distribution costs based on distance.
Data for the Customer care support. For example, how much money is spent to each
customer on customer care support, how responsive the customer care support, the
average time spent on each call has been missing.
Question 3:
What are the strengths and weaknesses of the five process improvement projects? Which project
should the management team select? Why?
Answer 3:
As mentioned earlier in the benefits all the proposals seem appealing in an organizational point of
view. However, there are a few challenges in terms of lack of an appropriate managerial tool which
forbids you from incorporating all the same time.
The detailed analysis on the merits and demerits of each proposal is mentioned below.
1. ABM Process Improvement Proposal: Responding to Customer
Merits:
2. Price of Quality
Merits:
Demerits:
Demerits:
4. Billing Costs
Merits:
Demerits:
Question 4:
What are the most important lessons from this case in your opinion?
Answer 4:
From reading the most important lessons that we have learned are as follows: Boost firms profitability:
ABC costing method has helped Stream International to estimate their costs of products /
services by assigning overhead costs to direct costs. Activity-based costing (ABC) is a
managerial accounting system which proves the above statement and is very useful for
firms in determining overhead and direct costs which results in firms profitability. ABC
costing method provides us sufficient information to make better decisions about the
profitability of several product lines in an organization.
Resource Allocation:
ABC costing allowed Stream International to have the most accurate costing of the
products/services by allocation the resources in the best possible way. Stream International
used ABC costing method which helped in profitability by allocating resources to profitable
items.
Increase firms productivity:
Stream International realized that ABC costing is easier to understand. This method not
only helped Stream International to have a deeper understanding of its products but also it
helped in exposing waste and inefficiency to boost its productivity.