One Way to Reduce the Risks for a Business That

question 94

Multiple Choice

One way to reduce the risks for a business that operates on just-in-time principles is to

• A) depend on one supplier for an important input.
• B) outsource the production of inputs only to advanced countries.
• C) hold an excess buffer stock of inventory.
• D) source inputs from several suppliers located in different countries.
• E) avoid using electronic data interchange.

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Definitions:

Minimum Required

The least amount that must be maintained or achieved in a specific scenario, such as a bank balance or stock level.

Screening Decision

A decision as to whether a proposed investment project is acceptable.

Internal Rate

Often referred to as the internal rate of return (IRR), it is a rate of return used in capital budgeting to measure and compare the profitability of investments.

Cash Flows

The cumulative sum of funds moving into and away from a company, influencing its ability to cover short-term obligations.