The economic analysis model of operations strategy

Most of the published research employed qualitative methods regarding a decision of operations strategy. This study attempts to explain operations strategy selection in terms of the optimal coordination of interactions among departmental business functions. This study applies an economic analysis model (EAM) for clarifying the fitness of individual operations strategies. The expected benefits of coordinating the cross-function integrations, the benefits of a new production process, and the opportunity costs of the original process are considered in this model. The executive manager is authorized to determine the risk parameter of individual strategies based on their expertise and a specific decision environment in the proposed model. The efficacy of the proposed model is demonstrated through discussion.