Which of the Following Statements Is Most Consistent with Efficient

question 98

Multiple Choice

Which of the following statements is most consistent with efficient inventory management? The firm has a

• A) low incidence of production schedule disruptions.
• B) below average total assets turnover ratio.
• C) relatively high current ratio.
• D) relatively low DSO.
• E) below average inventory turnover ratio.

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Definitions:

Economies of Scale

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Constant Returns to Scale

A situation in production where increasing the inputs exactly proportionally results in an equivalent increase in output.

Economies of Scale

The financial benefits gained by businesses as a result of their operation size, wherein the expense for each unit produced typically drops as the scale expands.

Average Total Costs

The total cost of production divided by the quantity of output produced; it includes both fixed and variable costs.