Norquay Inc

question 42

Multiple Choice

Norquay Inc.manufactures computers.The company tries to minimize the amount of inventory it must carry and therefore only purchases required components after a customer order is received.The computers are usually completed within two days of the customer order and then shipped to the customer on the fourth day following the purchase of materials.Supplier's terms dictate that all purchases must be paid for within 30 days.Norquay offers a deferred financing plan to all of its customers that allow them a 60-day period of no payments or interest.Most of the customers pay their entire balance on the 60th day following delivery of the computer.How many days are there between receiving the inventory from suppliers and receiving cash for the company?

• A)2 days
• B)4 days
• C)26 days
• D)64 days

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Definitions:

Disrupted Production

Interruptions in the normal flow of manufacturing processes due to unforeseen events, leading to delays and potential financial losses.

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.