How can a capital-intensive company achieve a cost advantage by revamping its value chain?
A)downsizing a direct sales force and utilizing distributors and dealers exclusively
B)eliminating sales operations at the company's website
C)via higher rates of capacity utilization to allow depreciation and other fixed costs to be spread over a larger unit volume, thereby lowering fixed costs per unit
D)centralizing facilities and outsourcing shipping and handling activities
E)expanding operations by eliminating low value-added or unnecessary work steps and activities

Question

Quizplus · Accepted Answer

By increasing the rates of capacity utilization, the company can spread its fixed costs over a larger unit volume, which would lower the fixed costs per unit. This would result in a cost advantage for the company, as it would be able to produce its products at a lower cost than its competitors.

Answer: D 
 By centralizing facilities and outsourcing shipping and handling activities, the company can reduce the costs associated with logistics and transportation. This would result in a cost advantage for the company, as it would be able to produce and deliver its products at a lower cost than its competitors.

How Can a Capital-Intensive Company Achieve a Cost Advantage by Revamping