Question

Which of the following statements best describes the ultimate goal of operations and supply chain strategies?

1) to produce and deliver products or services to satisfy customers
2) to make sure customers receive defect-free products
3) to produce and deliver products or services that delight customers
4) to make sure profits are maximized

Answer 1

The ultimate goal of operations and supply chain strategies is to maximize profits, by determining the optimal quantity to produce based on marginal costs and revenues.

Step-by-step explanation:

The ultimate goal of operations and supply chain strategies is to maximize profits. This can be understood by considering the basic definition of profit, which is essential for a perfectly competitive firm, and this involves determining the optimal quantity of goods or services to produce. Firms make decisions based on the relationship between marginal revenues and marginal costs, seeking the point where the difference between the two, and therefore profit, is greatest.

Regardless of market structure, whether it be perfect competition or monopolistic competition, the goal remains the same. In a monopolistic competition scenario, like the Authentic Chinese Pizza company, determining the profit-maximizing level of output involves careful analysis of these economic principles. Technologies such as improved transportation and refrigeration have expanded the capabilities of supply chains, further enhancing profit maximization opportunities.