3.3 - Collecting Information

Personally, i feel the internet can be a good source if you use appropraite websites with valid information. However, anyone can edit and post information on blogs and on wikipedia so in that sense it isn't reliable. Also, the printed word can be a good source if again it is from a reliable source that has been checked in books. Personally, i prefer the internet as there is a wider range of sources than that of the written word. Surveys can provide a good subjective test as it is mainly personal opinion of people off the street. Sensors are also fairly reliable as they provide objective data and it can't be tampered with. Predictions however i feel aren't a vary good source of information as essentially it is a an educated guess.

Discussion - 3.2 - Understanding the Problem

The problem from the companies point of view is that revenue is declining whereas total costs and salaries are increasing. This therefore means that the company is loosing money. The problem from Neil's point of view is that his position may be under threat as the salaries level is increasing at a greater rate than the revenue of the company. This could cause the company to cut jobs meaning Neil's job may be at risk. From the data provided, Jill's reading of the situation is correct as salaries appears to be the highest increasing amount in the graph. However, there could be other variable effecting the total cost such as increases in other areas which may also account for the rise in total cost. Jill's proposed plan may well be successfull if the salaries is the main cause of the total cost rising over the revenue. Jill's plan to reduce the amount of staff will cause unemployment and could also make the company perform less effectivly as you are getting rid of experienced staff who can work the machines to a good standard. Other causes of action which could be taken are a pay cut in staff which would reduce the amount on salaries, or being more energy efficient which will reduce the electrics bill causing the total cost to fall. However, the likley causes of these effects are that people may leave the job anyway if there is a pay cut to find a place which may pay more elsewhere.

Homework - Cost Definitions

Fixed Cost :- fixed charge: a periodic charge that does not vary with business volume (as insurance or rent or mortgage payments etc.)

Indirect Cost:- costs that are not directly accountable to a particular function or product; these are fixed costs. Indirect costs include taxes, administration, personnel and security costs, and are also known as overhead

Overhead Cost:- refers to an ongoing expense of operating a business. The term overhead is usually used to group expenses that are necessary to the continued functioning of the business but that do not directly generate profits.

Variable Cost:- A cost that varies in proportion to the quantity produced. Theoretically, variable costs are zero if there is no production. As opposed to fixed cost.