- Volume 14 Issue 2
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Method and Procedure for Economic Evaluation of Improvement Activities
- Kono, Hirokazu (Graduate School of Business Administration, Keio University) ;
- Ichikizaki, Osamu (Graduate School of Business Administration, Keio University)
- Received : 2015.02.02
- Accepted : 2015.06.05
- Published : 2015.06.30
The purpose of this paper is to propose an appropriate evaluation scheme for improvement activities, based on a simple model comprising cash inflow by sales as well as variable and fixed cost expenditures. The paper distinguishes capacity surplus and capacity shortage situations, and examines economic benefits gained by yield increase improvement and capacity increase. The paper then proposes a basic rule of thumb for economic evaluation of improvement activities. The logic is simple but useful in practice, being conducive towards improvement activities under current economic conditions with uncertainties.
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