Trade Discounts

question 39

Multiple Choice

Trade discounts:

• A) Are offered at every level of the channel: wholesalers, retailers and final customers.
• B) Are virtually standard across all industries in the U.S.
• C) Are reductions from list price.
• D) Reduce the cost of the product if the firm pays the bill within 20 days.
• E) Are seldom used.

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Definitions:

Lost Sales

The potential revenue that a company misses out on due to being out of stock, having insufficient capacity, or other reasons for not fulfilling customer demand.

Quantity Discounts

Price reductions applied to bulk purchases, incentivizing buyers to increase the volume of their purchase.

Annual Carrying Costs

The total expenses associated with holding or storing inventory over a year, including costs related to storage, insurance, and obsolescence.

Ordering Costs

Expenses associated with making an order for goods or services, including administrative costs, shipping charges, and time spent on ordering processes.