Which of the following companies is using cost drivers effectively to manage value chain activities cost efficiently?
A) Company A orders large amounts of supplies and keeps them stocked till customer demand rises to prevent falling behind schedule in meeting customer needs.
B) Company B uses just-in-time inventories and produces made-to-order products as and when customer demand rises.
C) Company C collects customer requests first and starts processing them only after reaching a certain number.
D) Company D routes all its supplies to a warehouse for storage and then transports them to individual factories for processing.
E) Company E substitutes lower-cost inputs with high-quality,high-cost inputs to gain customer attention and loyalty.

Question

Quizplus · Accepted Answer

Company B is using just-in-time inventories and made-to-order production, which are both examples of effectively using cost drivers to manage value chain activities cost efficiently. This approach minimizes storage costs and reduces the risk of excess inventory, while also ensuring that products are only produced when there is actual customer demand.

Which of the Following Companies Is Using Cost Drivers Effectively