Which of the Following Statements Is False

question 27

Multiple Choice

Which of the following statements is false?

• A) with respect to stockouts, a delayed sale is virtually costless to a company because of the customer's brand loyalty
• B) the higher the average cost for a stockout, the more inventory (safety stock) that should be held
• C) tradeoffs exist between carrying costs and stockout costs
• D) stockouts can be more costly than having too many items in stock
• E) all of the above are true

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflecting the cost of capital or the risk of the investment.

Present Value

The present evaluation of a future cash sum or series of cash receipts, factoring in a certain rate of return for discounting.

Interest Rate

The sum a lender charges a borrower to use assets, conveyed as a percentage of the principal's amount.