4.1 Learning Outcomes:

• Explain the concept of value and its implications for managing the supply chain.
• Explain how logistic costs can be managed for better value creation.

4.2 Action Required:

• The following table shows various costs incurred by a manufacturing company:

Cost	Variable cost	Fixed cost
Depreciation
Cost of shipping finished goods to customers
Wood used in manufacturing furniture
Managers salary
Electricity used in manufacturing furniture
Packing supplies for shipping products
Sand used in manufacturing concrete
Supervisors salary
Advertising costs
Executives life insurance

4.3 Test your Knowledge (Question):

• Answer with a tick mark or write in words which is a fixed cost, and which one is a variable cost.

4.4 Instructions

• Answer the question in the test your knowledge section.