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Econ Case Paper

In: Business and Management

Submitted By congye
Words 755
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1. Do managers often find it difficult to minimize costs?
Yes. In this case, it is very hard for manager to minimize costs due to a large number of freight yards and the difficulty of distributing of them over long distances. It is impossible for managers to have each day a reasonable complete knowledge of what happened at each yard. They must examine selected data concerning the performance of the yards during the day, and from these data they must evaluate a yard's performance. In evaluating performance, one piece of information that is used the costs incurred in the yard during the day.

2. Can control charts of the sort described in this case help managers to minimize costs? If so, how?
Yes. The control charts can help managers to minimize cost by evaluating the stability of a particular process and the variability within the process. More importantly, the control charts could help managers understanding and monitoring the effects so that managers would know how to improve the process. In addition, incurring controlling costs could have a positive influence financial performance in the long-run. For example, the cost incurred in some quality management initiatives, such as employee training and acquisition of high quality equipment, may have a short run negative impact on financial performance. However, those quality management would provide larger benefits in the long-run. In this case, control charts leads managers to observing if a process is stable and considering good news, data or ratings. As a result, managers would make immediate correct decisions against bad situations.

3. is equation (1) a short-run or long-run cost function? Why?
The equation (1) shall be a short-run cost function. In general, the short run refers to a period of time that at least one input is fixed and the other inputs can be varied. A relationship usually exists between

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