Three strategies P, Q and R have been initiated for cost cutting in a company producing respectively 20%, 30% and 10% savings. Assuming that they operate independently, what is the net saving achieved ?
Solution
Correct Answer: Option A
As these three strategies P, Q and R are independent so these will cut cost one after the other.
If initial cost is Rs 100, then
20% cost is cut after initializing strategy P, then cost will remain 80% = 80
further 30% cost is cut after strategy Q, then cost will remain 70% of 80 = 56
further 10% cost is cut after strategy R, then cost will remain 90% of 56 = 50.4
Thus final cost remains 50.4 % of the original cost. Hence net saving is 100 - 50.4 = 49.6 %.
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