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Explain How "Perverse Incentives" Such as COMPSTAT Can Lead to Organizational

question 66

Essay

Explain how "perverse incentives" such as COMPSTAT can lead to organizational corruption.


Definitions:

Carrying Cost

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs, among others.

Order Quantity

The amount of stock or goods a company purchases or plans to purchase in a single order.

Operating Cycle

The amount of time it takes for a business to buy inventory, sell that inventory, and collect cash from the sale.

Cash Cycles

The duration it takes for a business to convert its investments in inventory and other resources back into cash flows from sales.

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