What Would Be a Legitimate Reason for Upper Management to Insist

question 58

Multiple Choice

What would be a legitimate reason for upper management to insist on an internal transfer even though the product could be sourced outside the company at a price that is lower than the company's variable cost?

• A)Management is concerned that its manufacturing equipment will soon be obsolete, and it wants to get full use out of it before it happens.
• B)Management wants to ensure a secure supply of the product.
• C)The company has excess capacity.
• D)There is never a legitimate reason that justifies an internal transfer if a product can be sourced outside the company at a price that is lower than the company's variable cost.

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Definitions:

Primacy Effect

A cognitive bias that results in a person remembering information presented at the beginning of a list better than information in the middle or at the end.

Recency Effect

The tendency to remember the most recently presented items or experiences more efficiently than those presented earlier.

TOT Effect

The Tip of the Tongue phenomenon, a state where one cannot quite recall a familiar word but feels that retrieval is imminent.

Tip-Of-The-Tongue Phenomenon

A cognitive condition where a person is unable to recall a familiar word or name, experiencing a temporary block or lapse in memory.