Which One of the Following Will Decrease the Operating Cycle

question 75

Multiple Choice

Which one of the following will decrease the operating cycle?

• A) Paying accounts payable faster
• B) Discontinuing the discount given for early payment of an accounts receivable
• C) Decreasing the inventory turnover rate
• D) Collecting accounts receivable faster
• E) Increasing the accounts payable turnover rate

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Definitions:

Setup Cost

The expenses incurred to get equipment ready to process a different batch of goods.

Production Cycle

The series of steps involved in producing a good or service, from initial raw materials to the finished product.

Kanban

A visual scheduling system that controls the logistical chain from a production point of view, aiming to improve manufacturing efficiency by limiting work-in-progress items.

Safety Stock

Additional inventory kept on hand to guard against stockouts caused by uncertainties in demand and lead-time.