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%.
B. Reduce the quality of the input used by using a cheaper form of the input:
The reduction in quality should bring with it a reduction in the rate paid for the input.
|1||2311||2005||John H. Daniel Co. recruits tailors from Turkey to fill its workforce and avoid outsourcing. The workers are paid to relocate and are aided with the immigration and assimilation process. Turks are often pushed out of business by big companies in their home countries and are willing to work in America. They are provided with an apartment, rent and other costs as they settle and the company will co-sign loans for cars. The company produces 75,000 to 80,000 suits a year, many of them made to measure designs costing between $800 and $2,900.|
|2||3200||2006||In industries from airlines to glass-making, companies are curbing usage, revamping machinery, and shifting production schedules to offset energy costs. Pinehall Brick Co., for example, has started putting slightly larger holes in its bricks because lighter bricks take less power to produce.|
|3||4213||1997||Substituting rail transport for Teamster-driven trucks over the linehaul (terminal-to-terminal) portion of the move produces a cost savings of 25-40% per mile.|
|4||5651||2006||Steve & Barry's University Sportswear lures shoppers with casual clothing priced $7.98 or less – a 40% discount to prices at Wal-Mart Stores Inc. and Target Corp. Steve & Barry's also saves money in purchasing. It buys direct from overseas factories, like many others, but cuts costs by accepting longer lead times. It also saves by offering steady production throughout the year rather than season ramp-ups. Advertising isn't an expense Steve & Barry's wrestle with either – it relies mostly on word of mouth.|
|5||6512||2008||Software start-ups such as Carbonetworks Corp., Optimum Energy LLC, and Verdien Corp. are making new programs to help businesses to monitor their energy use and cut fuel bills. Glenborough LLC, a property-investment and management company, paid about $350,000 after rebates on one of its buildings for software designed to make air-conditioning chilllers use power at times of the day when power is cheapest. Optimum Energy's software was installed in the office building in La Jolla, CA, which Glenborough oversees. The energy savings are expected to run about $110,000 a year.|
|6||7372||2005||In an effort to push back against Google, Yahoo, and other rivals, Microsoft has created a new series of Web services. However, this is Microsoft's attempt to catch up with the start-ups hosted by its rivals. Web surfers can write documents at Writely.com and create spreadsheets at Nunsum.com, all without the use of traditional software. These outfits offer easy-to-use services that are inexpensive or free, often supported by advertising.|
|7||7375||2006||A handful of start-up companies, including Jingle Networks, has begun offering free directory assistance over the phone in return for the customer's willingness to listen to an ad. The free directory is appealing to more customers since traditional phone companies have raised the rates of their services over the past several years. Carriers can charge an average of $1.50 per 411 call on cell phones and $1.15 per call from fixed-line phones.|
|8||8062||2008||Hospitals are recycling a growing number of medical devices labeled as single-use such as scissors, scrubs, and surgeon blades, in a bid to save costs and stem medical waste. Hospital associations and environmental groups says that the devices they reprocess are as safe as new, thanks to modern sterilizations methods, cost 40% to 60% less, and can eliminate thousands of tons of waste from landfills. About 100 devices, just 2% of all devices labeled for single-use, are now reprocessed.|
|9||8062||2008||Hospitals are recycling a growing number of medical devices labeled as single-use such as scissors, scrubs, and surgeon blades, in a bid to save costs and stem medical waste. Kaiser Permanente started working with Ascent to reprocess single-use devices more than a decade ago, and sharply increased its use of reprocessed devices in 2006. Kaiser shaved about $3.5 million from its device costs in 2007, and eliminated about 45.7 tons of medical waste.|
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