Depending on the level of the cost hierarchy of an activity, cutting a volume of input to the benefit of one
business function may increase costs throughout the entire value chain.

Question

Quizplus · Accepted Answer

This is because reducing input volume can affect other activities and functions that depend on it or are interconnected with it, leading to disruptions or inefficiencies in the value chain. Thus, a holistic approach to cost management and value creation is needed to avoid unintended consequences and optimize performance across the organization.

Depending on the Level of the Cost Hierarchy of an Activity