An Inventory Decision Rule States, "When the Inventory Level Goes

question 105

Multiple Choice

An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE?

• A) One hundred is the reorder point, and 14 is the order quantity.
• B) Fourteen is the reorder point, and 100 is the order quantity.
• C) The number 100 is a function of demand during lead time.
• D) Fourteen is the safety stock, and 100 is the reorder point.
• E) None of these is true.

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Definitions:

Long-Term Investments

Assets intended to be held for more than one year, including stocks, bonds, real estate, and other securities.

Consolidated Financial Statements

Financial statements that aggregate the financial information of a parent company and its subsidiaries into one document, presenting the financial position and results of operations of the entire group as a single entity.

Held-To-Maturity Securities

Financial assets purchased with the intention and ability to hold them until a specific maturity date.

Trading Securities

Financial instruments bought and held primarily for selling them in the near term with the aim of generating profit on short-term price differences.