What Should Have Been the Initial Inventory in Units of Demand

question 35

Multiple Choice

What should have been the initial inventory in units of demand, if the production requirement in units of product is 900, demand forecast is 1,000, and the necessary safety stock is 20 percent of the demand forecast?

• A) 300
• B) 500
• C) 100
• D) 1,900
• E) Cannot find it

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Definitions:

General Equilibrium

A state in which all markets in an economy are in simultaneous equilibrium, with supply equaling demand in each market.

Normal Good

A good for which demand increases as the income of the consumer increases, showing a positive relationship between income and demand.

Complements

Goods that are consumed together because the use or enjoyment of one good enhances the use or enjoyment of the other.

Consumer Income

The total amount of income a consumer earns, influencing their purchasing power and spending patterns.