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MBA Econ

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Business Week, in an article dealing with management, wrote, "When he took over the furniture factory three years ago...[the manager] realized almost immediately that it was throwing away at least $100,000 a year worth of wood scrap. Within a few weeks, he set up a task force of managers and workers to deal with the problem. And within a few months, they reduced the amount of scrap to $7,000 worth [per year]." Was this necessarily an economically efficient move?

  • MBA Econ -

    This would depend upon how much it cost him to reduce the waste by 193,000 dollars.


    P.S. Reducing waste is always a benefit unless it costs you more than the waste!

  • MBA Econ -

    Well why didn't he just sell the scrap wood? It's not economically efficient if he throws out something he could sell.

    And yes, of course it depends how much it cost those managers and workers in time to save the $7000 and what else could they have been working on.

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