Economic Order Quantity (EOQ) – Definition and Formula

In today’s marketplace, optimization of resources, their adequate use, and cost reduction are the key attributes of a successfully developing company capable of competing effectively. For the qualitative analysis of available resources and the possibility of their optimal use in business practice, there is a large number of methods and models used depending on specific tasks. One of them is Economic Order Quantity (EOQ), which is a model used to determine the optimal quantity of goods or materials to be ordered at a given time in order to minimize the total cost of inventory. The point of minimizing inventory is to save costs since unsold goods take up space, to reduce risks since inventories can become obsolete or physically obsolete, which is especially true in the food industry, and to increase efficiency since excessive inventory can make it difficult to account for them. Thus, EOQ seeks to eliminate situations in Continue reading

Three Types of Portfolio Investments

Portfolio management is a process encompassing many activities of investment in assets and securities. It is a dynamic and flexible concept and involves regular and systematic analysis, judgment and action. The objective of this service is to help the unknown and investors with the expertise of professionals in investment portfolio management. It involves construction of a portfolio based upon the investor’s objectives, constraints, preferences for risk and returns and tax liability. The portfolio is reviewed and adjusted from time to time in tune with the market conditions. The evaluation of portfolio is to be done in terms of targets set for risk and returns. The changes in the portfolio are to be effected to meet the changing condition. Portfolio construction refers to the allocation of surplus funds in hand among a variety of financial assets open for investment. Portfolio theory concerns itself with the principles governing such allocation. The modern Continue reading

Deficit Spending – Meaning, Advantages, and Disadvantages

Deficit spending occurs when a shortage of financial resources in the federal budget arises. In the modern economic environment, the economies of many countries are associated with chronic budget deficits, i.e. exceeding budget spending over national incomes. Many economists correlate budget deficits with adverse impacts on economic development – the stimulation of inflation processes, the creation of barriers to economic growth, and negative social outcomes. However, a budget deficit is not necessarily an extremely negative phenomenon, and it is argued that budget deficits can provoke the revival of national economic activity. Money creation is considered a traditional method of budget balancing. The emissive method of covering budget deficits implies the increase in monetary volumes, i.e., the government issues extra money, which is used to cover excess expenditures. The major advantage of this method is the growth of money supply that is interrelated with the increase in the aggregate demand and Continue reading

Case Study on Business Ethics: Adelphia Communications Scandal

The Adelphia Communications scandal occurred in March, 2002 when three of the original founding family members which included the father John Rigas, and two of his sons Michael and Timothy, along with two other company executives were arrested for improperly taking assets from the nation’s sixth-largest cable television company. The scam involved one of the biggest financial frauds faced by a publically held company. In the end stakeholders were forced to absorb massive losses as their shares in stocks fell sharply. The Rigas family hid billions of dollars in debts by falsifying its financial records, and blatantly lying to their investors about it. Adelphia was founded in 1952 by John Rigas and his brother Gus Rigas in Coudersport, Pennsylvania with the purchase of their first cable franchise for $300. After 20 years, the Rigas brothers incorporated their company under the name Adelphia which derived its name from a Greek word Continue reading

Evaluating Advertising Effectiveness

An advertising measurement is adopted both before and after an advertising campaign is launched. After a campaign has been launched, it is essential to know how far the advertising plans, strategies and programmes are successful in achieving the objectives so that they may be modified and redesigned for better performance if needed. This process is known as evaluating advertising effectiveness. Some advertisers do not bother to measure advertising effectiveness. They expect that the sales will ultimately increase by reason of advertising. But, recently, problems and difficulties have compelled them to measure advertising effectiveness. The producers also adopt a measuring device because they incur a sizable amount of expenditure on advertising. The effectiveness of media and message are also assessed for their use in future. The results of same amount of advertising budget vary for several reasons. Only through the measuring of advertising effectiveness the success of a particular campaign can Continue reading

Case Study: Analysis of Barclays and Lehman Brothers Merger Issues

Barclays PLC is an international organization responsible for providing financial services to various people and companies across the world. In addition, the company has approximately 30,000 workers who are actively involved in retail and profitable banking. Additionally, the organization is also involved in the sale of credit cards, asset banking, control of wealth, and asset management services. Barclays PLC is also functions within the six business sections. The organization was able to expand its banking business activities in the United States by when it attained the American business of Lehman Brothers. Actually, this happened in the year 2008. Since its acquisition, the company has been gradually improving the image of Lehman Brothers business in the United States. In addition, the acquisition was to make the company become an international bank. The asset banking trade, Barclay’s investment and the business involved in managing the capital, business capital and the Barclays international Continue reading