Questions:
1. Define the terms efficiency and effectiveness and distinguish one from the other. Why is measuring the efficiency of discretionary costs often difficult? Explain how the effectiveness of discretionary cost activities can be measured.
2. What types of discretionary costs are subject to control as engineered costs? Provide several examples.
3. Why do firms hold cash balances? Why do some firms hold larger cash balances than other firms?
4. How is technology affecting supply-chain purchasing practices and transaction costs?
5. What are the four generic approaches to reducing uncertainty? Describe the context in which each approach is typically used.
6. What factors create uncertainty when estimating future costs and revenues?