A's Building Is Insured by B Co

question 20

Multiple Choice

A's building is insured by B Co.under a standard policy that covers all loss occasioned by fire.A's business is not doing well,and A figures that if his building is destroyed by fire,he can put part of the insurance proceeds into his business to keep it running.One evening,A starts a fire in his building that subsequently destroys it.In this case

• A)the insurance company is bound to pay the proceeds of insurance to A.
• B)the insurance company is not bound to pay the insurance proceeds at all.
• C)the insurance company is not bound to pay the proceeds of insurance to A,but must pay it to A's family.
• D)the insurance company is bound to pay the insurance proceeds to A's business.
• E)none of the above

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Definitions:

Safety Inventory

A quantity of stock kept on hand to prevent stockouts due to variability in supply or demand.

Product Availability

The extent to which a product can be purchased at any given time and location.

Coefficient of Variation

A statistical measure of the dispersion of data points in a data series around the mean, expressed as a ratio to the mean.

Demand Forecast

The process of estimating the quantity of a product or service that consumers will purchase in the future.