Which of the Following Statements Regarding Aggregate Planning Is True

question 69

Multiple Choice

Which of the following statements regarding aggregate planning is true?

• A) In a pure level strategy, production rates or work force levels are adjusted to match demand requirements over the planning horizon.
• B) A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies.
• C) In a mixed strategy, there are changes in both inventory and in work force and production rate over the planning horizon.
• D) Because service firms have no inventory, the pure chase strategy does not apply.
• E) All of the above are true.

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Definitions:

Incremental Cash Flows

Additional cash flows from taking on a new project, crucial for analysis in capital budgeting decisions to determine a project's potential profitability.

Capital Budgeting

Analysis techniques concerned with justifying money spent on long-term assets and projects.

Profitability

A measure of the efficiency of a company or investment in generating profit or return compared to its revenue or investment size.

Capital Budgeting Process

The procedure companies use to evaluate and select long-term investments that are aligned with their goal of shareholder wealth maximization.