Brainstorming Ideas: Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

A. Purchase in Larger Quantities:
Purchase in larger quantities to get lower unit prices. In most markets a customer who purchases in larger quantities gets a lower unit price than one who purchases in smaller quantities. These concepts increase the amount of purchases the company makes at one time.

  1. Warnings and advice
  2. Offer security in return for lower rate
  3. Reduce number of suppliers to buy more from a few
    1. With similar unrelated institutions such as coops and associations Examples>>
    2. With related companies Examples>>
    3. Through a major customer Examples>>

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