Alex’s new constraint – Demand
A: Increase profit
B-D: | Assumption(s) | Injection(s) |
accepting orders 10% below cost will increase market's demand for our products. | There are other actions to increase market demand like offering faster shipping times. |
In order to Increase profit I must Increase market demand and in order to Increase market demand I must accept orders 10% below cost. But, in order to Increase profit I must also avoid price wars and in order to avoid price wars I must Not accept orders 10% below cost. I can't both accept orders 10% below cost and Not accept orders 10% below cost.
Relation | Assumption(s) | Injection(s) |
D-D' | Both decisions/actions are mutally exclusive. | |
B-D | accepting orders 10% below cost will increase market's demand for our products. | There are other actions to increase market demand like offering faster shipping times. |
C-D' | 1. Accepting orders 10% below cost would cause price wars | Adding another competitive advantage with the reduced cost could avoid a price war. |
A-B | 1. Market demand is a constraint 2. Market demand will increase profits | |
A-C | 1. A price war would cause loss of market share 2. A price war would cause a decrease in profits |