Lucinda Is Contemplating a Long-Range Planning Strategy That Will Allow

question 59

Essay

Lucinda is contemplating a long-range planning strategy that will allow her to defer sizable portions of her income for 10 years. What type of planning strategy is she contemplating? What are some potential risks associated with this type of strategy?

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Definitions:

Just-in-time

A production strategy that aims to reduce in-process inventory and associated carrying costs by producing goods only as they are needed in the production process.

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, and spoilage costs.

Shortage Costs

Costs incurred by a business when the demand for its products exceeds its supply, often leading to lost sales and customer dissatisfaction.

Short-term Financial Policy

Guidelines or strategies focused on managing a company's current assets and liabilities to ensure short-term operational needs are met.