At the End of a Recent Year, Solectron, Milpitas, California

question 277

Multiple Choice

At the end of a recent year, Solectron, Milpitas, California, an electronics contractor, made half of his purchases under vendor-managed inventory programs. Solectron:

• A)had its suppliers perform all materials handling activities.
• B)authorized its suppliers to eliminate as many wholesaling functions as possible from the supply chain.
• C)authorized the use of distribution centres to provide quicker customer response times.
• D)used a system in which its suppliers determined the product amount and assortment that should be in stock.

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Definitions:

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Expansion Option

An opportunity in capital budgeting for a company to invest in additional projects or assets based on its initial project's success.

Decision Tree Analysis

A graphical representation of possible solutions to a decision based on different conditions or events, used in risk management and decision making.

Cost Of Capital

The necessary rate of return to consider a capital expenditure project, like the development of a new factory, as viable.