Skip to content

CMA Intermediate · Operations Management and Strategic Management · Designing of Operational Systems and Control

A firm using value analysis/value engineering on a product finds a component that costs ₹40 but whose function can be delivered by an alternative costing ₹28 with the same performance and quality. Which conclusion is consistent with value engineering?

The firm should adopt the alternative. Value engineering seeks to retain required function and quality at lower cost, and here the same performance is achieved for ₹12 less per unit, so value rises without any sacrifice in function.

  1. AAdopt the alternative, since function is retained at lower cost, improving valueCorrect
  2. BRetain the component, because value engineering only raises quality
  3. CAdopt the alternative only if its function is also reduced
  4. DReject the alternative, because lower cost always means lower value

Explanation

Value is function relative to cost. The alternative gives the same function at ₹12 less per unit (40-28), so value improves. Value engineering aims at this without sacrificing performance, so the other statements are wrong.

Did you get it right without looking?

One question tells you little. A timed set on Designing of Operational Systems and Control shows your real accuracy, how long you take and where you lose marks.

Practise Designing of Operational Systems and ControlFree diagnostic mock

More Designing of Operational Systems and Control questions