Opportunities are like angels ones fly away never comes back

As we know cost includes the sum of all expenses in any kind of action. Opportunity cost is an essential factor which plays a major role. Opportunity cost is unseen and hidden. This is an interesting factor for discussion.

Let us discuss the importance of opportunity cost in day to day life. We can use a short form” OC” for opportunity cost.

Mr. A went to one restaurant for a hot drink because of the heavy rain outside. The restaurant owner gave him two options Tea or coffee. Quality, price, net effects, quantity, etc are the same for both options. In this case, psychological discrimination and evaluations need to maintain for the right decision. A decision is an end part or final stage of the process. OC acts as a signboard for accurate decisions.

Let X is the probability of not talking coffee, F is the net benefits of coffee, and E is the net benefits of Tea. Simply

OC= X%*F*COFFEE+ (1_X) %*E*TEA

Revenue can be zero but cost never is zero. Let us think from the restaurant owner’s angle. Revenue is the selling price of the hot drink and cost is the production cost of hot drink (assume that if there is no production then there will be no fixed or variable cost).

Revenue= production costs + profit

If there is no production, the cost will be zero; profit will be zero, and revenue

Will be zero due to the above assumptions we made. In this case, OC comes in to picture.

(OC=profit). In short, we can conclude that revenue can be zero but cost never

Turns to zero due to the presence of OC.

OC has tremendous scope in managerial decision makings. If a company

Introduced one expansion project, it would delay due to some contentions.

Project completed after 5 years than planned. OC needs to play a vital role.

OC= NET BENEFITS FORGONE

If the managers are able to calculate OC correctly, then situations like delay or avoidance in the completion of projects will reduce.

OC has greater influences or relevance in our day to day life. In almost all thoughts in our mind like “do or not do, go or not go” etc” OC’s calculation can contribute positive results.

“Opportunities are like angels ones fly away never comes back”