Refer to the Information Provided in Table 14 -Refer to Table 14

question 116

Multiple Choice

Refer to the information provided in Table 14.1 below to answer the question that follows.
Table 14.1
B's Strategy
$\begin{array}{c}\begin{array}{lll}\\\hline\\\\\text { A's Strategy }\\\\\\ \end{array}\begin{array}{lll}\text { Raise Price }\\\hline \text {Raise A's profit \( \$ 3,000 \) }\\ \text {Price B's profit \( \$ 3,000 \) }\\\\ \text {Don't A's profit \( \$ 15,000 \) }\\ \text {Raise \( B^{\prime} \) s profit \( \$ 10,000 \) } \end{array}\begin{array}{lll}\text { Don't Raise Price}\\\hline\text { A's profit \( \$ 10,000 \) }\\\text { B's profit \( \$ 15,000 \) }\\\\\text { A's profit \( \$ 5,000 \) }\\\text { B's profit \( \$ 5,000 \) } \end{array}\end{array}$

-Refer to Table 14.1. Firm A?s optimal strategy is

• A) to not raise the price of its product.
• B) to raise the price of its product.
• C) dependent on what Firm B does.
• D) indeterminate from this information, as no information is provided on Firm A?s risk preference.

---

Definitions:

Safety Inventory

Additional stock kept to mitigate the risk of stockouts and production halts due to fluctuations in demand and supply chain disruptions.

Supply Chain Manager

An expert in charge of supervising and directing the strategy and operations of a corporation's supply chain and logistics.

Replenishment Cycle

The recurring process of restocking sold-out or used products in inventory to maintain a desired stock level.

ESC (Expected Shortage per Cycle)

A metric used in inventory management forecasting the expected stockout quantity for a given inventory cycle, aiding in optimization and planning.