Companies sometimes develop standards based on historical data. Which of the following statements about this approach is correct?
A) This is an appropriate approach for mature production process.
B) This is an appropriate approach for processes that are labour intensive.
C) This is an inappropriate approach because it is a relatively more expensive approach to standard setting.
D) This approach is only acceptable for manufacturing companies.

Question

Quizplus · Accepted Answer

Developing standards based on historical data is appropriate for a mature production process because there is enough data available to establish reliable benchmarks. This approach may not be necessary for processes that are not yet mature or are undergoing frequent changes as the historical data may not accurately reflect the current situation. Additionally, this approach can be cost-effective as it utilizes existing data rather than conducting new studies or experiments. It is not limited to manufacturing companies and can be applied to other industries as well.

Companies Sometimes Develop Standards Based on Historical Data