Question

Qualitative Factors. For each of the following independent scenarios, identify at least one qualitative factor that should be considered before making the decision.

A company sells three types of computers (laptops, desktops, and palmtops), all of which are profitable. The company faces a machine-hour bottleneck and plans to eliminate the palmtop product because it has the lowest contribution margin per machine hour.

A company plans to drop an unprofitable customer.

A maker of high-end stereo equipment would like to shut down its manufacturing facility and outsource production.

Answer 1

	The following are the quantitative factors that should be taken into account in following cases:
a	Labor Morale: If any segment is dropped, it will also cause layoff, and in turn laborers become
	uncertain with job security and thus it may impact productivity.
b	External Reputation : With the drop an bigger customer, the company may suffer dent in reputation
	in the eyes of the Investors and creditors.
c	Quality of the product: Outsourcing may not produce the quality of goods which the business can
	by producing inhouse. This will cause loss in long run.