Operations management is the most important area of business

To illustrate how a firm can maximize its profit through the efficient use of the factors of production available to it, I will consider the case of a hypothetical firm called Tiza Enterprise. This firm in question specialises in the production of food and beverage products for a local market. In order to lucidly explain this concept my essay will be built on a few foundational assumptions such as the principle of scarcity and opportunity cost.
Within the scope of this essay opportunity cost will be narrowed down to the task of making choices between a list of competing alternative choices of the factors of production measured against the cost factor in any of the choices to be made.
Explicit and implicit cost factors have been provided for in the operational and organizational structure of Tiza Enterprise.
The managers of Tiza Enterprise are not also oblivious of the fact that they are operating in a highly competitive industry which makes it imperative for them not to compromise on maintaining and possibly improving both economic and technological efficiency principles in their quest to minimize cost whilst maximizing profit.
Labour is an important cost factor, which can be manipulated with competitent managerial expertise to achieve the goals of the firm. To this end, in deciding on the firm’s labour hiring policy, Tiza enterprise hires the quantity of labour that is tantamount to the marginal revenue product and marginal factor costs in direct consonance with the going factor market price. Take for instance, the current going factor market price is $15 then Tiza Enterprise hires labour in an incremental system until marginal revenue product reaches $15. At this point it can be conveniently said that Tiza Enterprise has gone beyond the break-even level and now achieving a harmony between factor price and marginal revenue product and is thus operating efficiently.

argumentative essay