A Run-Out Policy of Product Deletion

question 8

Multiple Choice

A run-out policy of product deletion

• A) lets the product decline without changing the product strategy.
• B) is an immediate-drop decision.
• C) exploits any strengths left in the product.
• D) raises the price of the product continually to secure as much profit as possible before the product is priced out of the market.
• E) occurs when production cannot keep pace with demand because of material shortages.

---

Definitions:

Operating Cash Flow

Operating cash flow is a measure of the cash generated by a company's regular business operations, indicating the company's ability to generate sufficient positive cash flow to maintain and grow its operations.

Net Present Value

The measurement of the profitability of an investment, calculated by subtracting the present values of cash outflows from the present values of cash inflows over a period of time.

Contribution Margin

The amount by which a product's sales exceed its variable costs, contributing towards covering fixed costs and generating profit.

IRR

Internal Rate of Return; a metric used in financial analysis to estimate the profitability of potential investments.