Question 1

1. Research and development

d) Salary of a computer scientist working on the next generation of minicomputers
f) Purchase of competitors’ product for testing against potential future Compaq products
2. Product/ Service/ Process design
c) Payment to David Kelley Designs for design of the Armada Notebook
h) Cost of cables purchased form an outside supplier to be used with the Compaq printer
3. Production
a) Electricity costs for the plant assembling the Presario computer line of products
4. Marketing
g) Payment to a television station for running Compaq advertisements
5. Distribution
b) Transportation costs for shipping Presario software to a retail chain
6. Customer service
e) Cost of Compaq employee’s visit to a major customer to illustrate Compaq’s ability to
interconnect with other computers.

Question 2

The Economist

Why Samsung of South Korea is the biggest firm in Vietnam

It has helped to make Vietnam the second-biggest exporter of smartphones in the world, after
China. Outsourcing (Cost Management Decision)

https://www.economist.com/asia/2018/04/12/why-samsung-of-south-korea-is-the-biggest-firm-in-
vietnam

Question 3

a) A manufacturer decides to sell directly to end customers that is an example of integration.

Merino Designs might choose to operate across all main components of the industry value
chain (highly vertically integrated) because it has more control over the value chain. It has
more control over the way the product is presented and at what prices it is sold in the
market. It also has better cost control due to the removal of the middleman.
b) Structural cost management
- Structural cost management employs tools of organizational design, product
design and process design to create a supply chain cost structure that is
coherent with firm strategy (Anderson and Dekker, 2009, p. 289)
- Structural cost management = deliberate management
Examples of structural cost management decisions
- Scope of operation
- Scale of operation
- Process design
- Product design
Executional cost management
 - Employs measurement and analysis tools to evaluate supply chain performance
Examples of executional cost management tools
- Product costing, activity-based costing
- Budgets and variance analysis
- Customer profitability analysis

Question 4

Rent

Alice 40% [12/30]

Brendon 33% [10/30]

Carl 27% [8/30]

Electricity

Each person contributes $10 of fixed charge

The usage charge will be divided equally among three people