ACC 310F Chapter Notes - Chapter 1: Celebrity Chef, W. M. Keck Observatory, Controllability
Document Summary
By picking an option, a decision maker chooses to receive some benefits and incur some costs relative to doing nothing. The decision maker has control over the costs that will be incurred and the benefits that will be received. A decision"s horizon significantly influences the cost and benefits we to consider as being potentially relevant to the decision. A cost or benefit for a decision option is controllable if the decision maker can avoid it by not picking the option. Benefits and costs that are not controllable cannot be relevant, but not all controllable costs and benefits are relevant. Ex. home theater: cost of 3d capable receiver is controllable but not relevant. As the time horizon of your decision expands, then more costs and benefits are going to become relevant to your decision. Relevant cost ,600 for instructor salaries is a controllable cost. Incremental ,000 for membership revenue is a controllable, but not relevant benefit.
