Unit 10 question

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mini_schnauzer
mini_schnauzer Registered Posts: 347 Dedicated contributor 🦉
I'm going around in circles - a question regarding the knowledge and understanding part of Unit 10:

How do you measure cost effectiveness?

I think I am making the question harder in my head than it really is - but I have cold brain (and I havent even eaten ice cream!)

Thanks in advance

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  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    I'm going around in circles - a question regarding the knowledge and understanding part of Unit 10:

    How do you measure cost effectiveness?

    I think I am making the question harder in my head than it really is - but I have cold brain (and I havent even eaten ice cream!)

    Thanks in advance

    Every weakness that you have identified in your project, you should be able to evalute the improvements in terms costs and cost effectiveness of your recommendations to improve/ eradicate the weakness.

    for example

    weakness: invoices posted late to customers:
    Recommendations: invoices should be posted the same day as goods delivered.
    Question? If invoices were posted 5 days late, what will it cost the company?

    effectively the customer is receiving 5 days extra credit.
    therefore £1 times 15% bank overdraft rate divide by 365 days times 5 equals the cost of interest payable to bank on the company's overdraft. = £0.002

    If the value of invoice was £500 the cost = £1.00
    If the value was £500,000 cost = £1000

    and you can go on.........
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