Jack Is Considering Adding Work Jeans and T-Shirts to the Items

question 316

Multiple Choice

Jack is considering adding work jeans and T-shirts to the items he stocks in his general store provided that his payback period is less than 2.5 years. He estimates that the initial cost of inventory will be $6,750. The remodeling expenses required for this addition are $18,200. Jean and T-shirt sales are expected to produce net cash inflows of $10,200, $14,500, and $16,600 over the next three years, respectively. Jack _____ add the jeans and T-shirts to his offerings as the payback period is _____ years.

• A) should; 1.67
• B) should; 2.02
• C) should; 3.67
• D) should not; 2.02
• E) should not; 3.67

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Definitions:

Operations Research

The application of advanced analytical methods to help make better decisions, using techniques from mathematics, science, and engineering.

Mathematical Techniques

Refer to the quantitative methods and models used to solve problems and make decisions in fields such as operations research, finance, engineering, and economics.

Hawthorne Studies

A series of experiments conducted in the 1920s and 1930s that highlighted the impact of work conditions, social factors, and employee attitudes on productivity.

Social Factors

Aspects of society and culture that influence individuals' behaviors, actions, and preferences.