Dec 5, 2010

Quantitative, Contemporary and Emerging views of Management

Quantitative Approach:-
It involves the use of quantitative techniques to improve decision making.
Branches in the Quantitative Management Viewpoint:
1.    Management science / operations research:-
It is an approach aimed at increasing decision effectiveness through the use of complicated mathematical models and statistical methods.

2.    Operations Management:-
It is the function or field of expertise that is primarily responsible for the production and delivery of an organization’s products and services.

3.    Management information systems (MIS):-
It is the name often given to the field of management that
focuses on designing and implementing computer-based information systems for use by management
Contemporary viewpoints:
This school of thought or view point about management includes those major ideas about managing and organizations that have emerged since the 1950s.

The systems theory approach:-
It is based on the idea that organizations can be visualized as systems of interrelated parts or subsystems that operate as a whole in search of common goals.

Contingency Theory:-
It is the view that appropriate managerial action depends on the particular parameters of each situation.

Emerging views:
A. Globalization.:-
Managers in all types and sizes of organizations are faced with the opportunities and challenges of globalization.

B. Entrepreneurship:-
It refers to the process whereby an individual or a group of individuals uses organized efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness.

C. Managing in an E-Business World:-
1. E-business (electronic business)
2. E-commerce (electronic commerce)

D. Need for Innovation and Flexibility.

E. Quality Management Systems.
1. Total quality management:-
It is a philosophy of management that is driven by customer needs and expectations and focuses on continual improvement in work processes

F. Learning Organizations and Knowledge Management.
1. A learning organization is one that has developed the capacity to continuously adapt and change.
2. Knowledge management involves cultivating a learning culture where organizational members systematically gather knowledge and share it with others to achieve better performance.

G. Theory Z : William Ouchi’s:-
Theory Z combines positive aspects of American and Japanese management into a modified approach aimed at increasing managerial effectiveness.

Dec 3, 2010

Trade Discounts-Markup-Markdown- Trade Values- Trade Terms

Discount is a reduction in price which the seller offers to the buyer.

Amount of discount =    d × L
Where, d = Percentage of Discount
L = List Price
Net Price = L – Ld = L(1 – d)
Net Price = List Price – Amount of Discount 

Markup is an amount added to a cost price while calculating a selling price.

Markup as Percentage of Cost (MUC):
Here markup is some percentage of cost price. For simplicity, it is also named as %Markup on cost. The relation between %markup on cost, cost price and selling price is:
Selling Price = Cost price + (Cost price × %Markup on cost)
                    = Cost price (1 + %Markup on cost)

Markup as Percentage of Sale price (MUS):
Here markup is some percentage of selling price. For simplicity, it is also named as %Markup on sale. The relation between %markup on sale, cost price and selling price is:
Selling Price = Cost price + (Selling price × %Markup on sale)
Cost price = Selling price – (Selling price × %Markup on sale)
                 = Selling price (1 – %Markup on sale)

Rs Markup:
Markup in terms of rupees is called Rs markup. The relations between Rs markup, cost price and selling price are:

    1.   Selling Price = Cost price + Rs Markup
    2.   Rs Markup = %Markup on cost × Cost price
    3.   Rs Markup = %Markup on sale × Selling price

For example:
The cost price of certain item is 80Rs and its selling price is 100Rs. Then
Rs Markup = Selling price – Cost price
                  = 100 – 80
                  = 20 Rs

Markdown is a reduction from the list/cost price.

This refers to the giving of further discounts as incentives for more sales. Usually such discount is offered for selling product in bulk.

L = List price = 100
D = discounts

    Net price = L(1-D1)(1-D2)(1-D3)   
Single equivalent discount rate = L – Netprice =? %
Rs. Discount = (0.2787)(20000)
                             = 5,574 Rs

Find the single discount rate that is equivalent to the series
15%, 10% and 5%.
Apply the multiple discounts to a list price of Rs. 100.
Net price = (1-d1)(1-d2)(1-d3)
               = 100(1 -15%) (1 - 10%) (1 - 5%)
               =100(0.85) (0.9) (0.95)
               = 100(0.7268)
               = 72.68
% Discount = 100 - 72.68
                   = 27.62%

Cash Discount is allowed on Invoices, Returned Goods, Freight, Sales Tax and A common business phrase for a cash discount is "3/10, net/30," meaning that a 3% discount is offered if the amount due is paid within 10 days; otherwise 100% of the amount due is payable in 30 days

Invoice was dated May 1st. The terms 2/10 mean that 2% discount is offered if invoice is paid up to 10thMay.
What is the net payment for invoice value of Rs. 50,000 if paid up to 10th May?
Cash Discount
N = L(1 – d)
= 50,000(1-0.02)
= 50,000(0.98)
= 49,000 Rs.

Discount Periods are periods for the buyer to take advantage of Discount Terms.

Credit Periods are periods for the buyers to pay invoices within specified times.

When you buy on credit and have cash discount terms, part of the invoice may be paid within the specified time. These part payments are called Partial Payments.
You owe Rs. 40,000.
Your terms were 3/10 (3% discount by 10th day).
Within 10 days you sent in a payment of Rs. 10,000.
Rs. 10,000 was a part payment.
How much is your new balance?
First we will find the amount that if 3% discount is given on it, the net amount is 10000Rs.
Let that amount is t. Then
10000 = t (1 – 0.03)
This implies,    t =      10000    
                                (1 – 0.03)
Thus, t = 10309Rs
This means that although you pay 10,000Rs, due to 3% cash discount 10309Rs among 40,000Rs is paid.
Hence the new balance = 40000 – 10309 = 29691Rs.


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