Question

Shahida is in-charge of the centralized procurement of merchandise for all the retail units of a popular chain store at its head office in Chennai. From there the goods are dispatched to its network of retail shops. The advantage of Shahida’s function to the organisation is
a. Economies of scale;
b. Low cost;
c. both a and b.;
d. No bad debts.

Answer 1

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(c) BOTH (A) & (B).

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Thanks !!

Answer 2

In this case of Shahida’s functioning as the in-charge of the centralized merchandise procurement unit, it can be said that she is enjoying both a and b options. A single head office unit is used for procurement of merchandises of every retailer.

Hence the cost spent is effective and aiding economies of scales as well.

Economies of scale occur when a firm saves on its costs spent by making more products.