What is the relationship between the cost of selection and the opportunity?
The cost of selection and opportunities is related to the measure that the cost of the opportunity refers to the price of selection from a number of available options. This means that the costs of the opportunity are derived by evaluating the value of the choice in terms of another option that must be due to selected forfeiture. The cost of selection and opportunities can be viewed from a business point of view; However, this concept of selection and opportunity also applies to personal decisions.
Illustrations for selection and opportunities can be observed in the event of a business in terms of decisions that entrepreneurs, CEO and business managers must constantly carry out in the natural course of business. For example, if a company has a choice of children's diapers or children's napkins, the cost of the opportunity can be determined by assessing the cost of a selected choice. If children's wipes and children's diapers stand the same and the company decides to produce diapers, occasional storage for not derived by assessing the cost of decision to make diapersSKů. Assuming the company earns annual napkin sales of $ 1,000,000, while sales from diapers lead to $ 800,000, the cost of diaper production would be $ 200,000.
The same concept can be used for consumers. If the consumer goes to the store to buy a diaper or baby napkins, the costs of the opportunity are derived by the assessment of the relative price of the forfeited items in relation to the selected item. If the price of one box of diapers is $ 15 and the price of a baby napkin is $ 5, the cost of buying one box of diapers is three packs of baby wipes or $ 15. Using the concept of opportunities to analyze several options allows the company to decide which choice is the best alternative.
In more durable, the Rsonal application, selection and opportunities can be derived from the different options that individuals do every day. Assuming that the individual is inspired to write a song, but the wayNothing to do, which allows you to go through the moment of inspiration, the cost of the opportunity can be analyzed by checking the benefits of the lost in the selection to not act. If the song became the sale of triple platinum, the Grammy winner, then the opportunity would include factors such as lost sales, grammyster and recognition, unlike the decision not to act.