One Type of Demand Fluctuation Is Caused by Random Variation

question 12

Multiple Choice

One type of demand fluctuation is caused by random variation.What is random variation?

• A) errors in inventory management
• B) errors not caught by using exponential smoothing
• C) demand that cannot normally be anticipated
• D) failure to properly execute the SO&P process plan

---

Definitions:

Discount Rate

Within discounted cash flow analysis, it's the interest rate applied to derive the present value of cash flows expected in the future.

Profitability Index

A financial tool used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Cash Inflows

Cash inflows are the money received by a business from its various activities, such as sales revenues, financing, and investments.

Investment Projects

Initiatives undertaken by businesses to invest in assets or activities with the expectation of generating future benefits or returns.