PH produces many electronics products for the USA, Europe, and the UK. The plugs
ID: 468251 • Letter: P
Question
PH produces many electronics products for the USA, Europe, and the UK. The plugs required for each of these geographical areas are different, so originally PH had produced three different versions of each product. Recently, they decided to create one version, and then ship these with three different plugs (i.e., of which two are redundant for the customer). What is the most likely result of this decision? -Higher safety stock costs, lower production costs -Higher safety stock costs, higher production costs -Lower safety stock costs, higher production costs -Lower safety stock costs, lower production costs
Explanation / Answer
Lower safety stock costs and lower production cost.
This is an example of standardisation and modularity. It leads to lesser SKUs and therefore less safety stock is required and hence lower safety stock costs. The item is standardized simplied and hence requires lower production cost.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.