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is the making of gain in 
Business activity for the benefit of 
the owners of the business.
The total amount of money that the firm 
receives from sales of its product or other 
sources. 
The cost of all factors of...
 Profit is the surplus of revenue over and 
above all paid-out costs, including both 
manufacturing and overhead expenses...
A monopolist maximizes profit by choosing a 
quantity where marginal revenue equals marginal 
cost 
A process that compani...
 PROFIT = TR-TC 
 Total Revenue (TR): This is the total income a firm 
receives. 
 Total cost: refers to the total expe...
 Haziness of the concept “Profit” 
 Ignores Time Value of Money 
 Ignores the Risk 
 Ignores Quality
- Aims to achieve the most cost-effective 
way of delivering goods 
and services to the required level of 
quality.
Lower unit cost (competitiveness) 
Higher gross profit margin 
Higher operating profits 
Improved cash flow 
Higher R...
 Strategic 
-based on the business model 
location production overseas 
core activities versus outsourced 
 Tactical 
-f...
 Eliminating waste and avoiding(lean production) 
 Simplifying processes and procedures 
 Outsourcing non-core activiti...
 Business left with insufficient capacity to 
handle unexpected or short-term increases in 
demand 
 Cost reductions by ...
A profit center is separately-identifiable 
part of a business for which it is possible to 
identify revenues and cost (i....
Profit maximization and Cost Minimization
Profit maximization and Cost Minimization
Profit maximization and Cost Minimization
Profit maximization and Cost Minimization
Profit maximization and Cost Minimization
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Profit maximization and Cost Minimization

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Profit maximization and Cost Minimization data analysis for Engineering Management

Published in: Business
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Profit maximization and Cost Minimization

  1. 1. is the making of gain in Business activity for the benefit of the owners of the business.
  2. 2. The total amount of money that the firm receives from sales of its product or other sources. The cost of all factors of production.
  3. 3.  Profit is the surplus of revenue over and above all paid-out costs, including both manufacturing and overhead expenses.  It is the difference between a Company’s total revenue and its opportunity cost.
  4. 4. A monopolist maximizes profit by choosing a quantity where marginal revenue equals marginal cost A process that companies undergo to determine the best output and price levels in order to maximize its return.  Total Revenue Total cost Method  Marginal Revenue Marginal Cost Method
  5. 5.  PROFIT = TR-TC  Total Revenue (TR): This is the total income a firm receives.  Total cost: refers to the total expense incurred in reaching a particular level of output; if such total cost is divided by the quantity produced, average or unit cost is obtained.  MARGINAL REVENUE:IS THE CHANGE IN REVENUE WHICH COMES FROM SELLING AN ADDITIONAL UNIT OF OUTPUT.  MARGINAL COST:IS THE CHANGE IN COST WHICH COMES FROM PRODUCING AN ADDITIONAL UNIT OF OUTPUT.
  6. 6.  Haziness of the concept “Profit”  Ignores Time Value of Money  Ignores the Risk  Ignores Quality
  7. 7. - Aims to achieve the most cost-effective way of delivering goods and services to the required level of quality.
  8. 8. Lower unit cost (competitiveness) Higher gross profit margin Higher operating profits Improved cash flow Higher ROCE
  9. 9.  Strategic -based on the business model location production overseas core activities versus outsourced  Tactical -focused on the detailed function choice of suppliers approach to stock holding
  10. 10.  Eliminating waste and avoiding(lean production)  Simplifying processes and procedures  Outsourcing non-core activities(e.g. transaction processing, payroll, call handling)  Negotiating better pricing with suppliers  Pruning product ranges and costumer accounts to eliminate unprofitable business  Using the most effective methods of training and recruitment  Introducing flexible working practices  Aggressive control of overheads(e.g. banning first/business class travel)
  11. 11.  Business left with insufficient capacity to handle unexpected or short-term increases in demand  Cost reductions by one department may surprise and /or annoy other functions if they are not properly communicated and coordinated
  12. 12. A profit center is separately-identifiable part of a business for which it is possible to identify revenues and cost (i.e. calculate profit)

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