Which of the Following Statements Regarding Inventory Models Is True

question 50

Multiple Choice

Which of the following statements regarding inventory models is true?

• A) Models using normal distribution assumptions may not represent situations with highly variable daily demand.
• B) Models do not have to be consistent with the operational realities of production line and resource constraints.
• C) It is usually safe to assume the cost of capital is negligible.
• D) Catastrophic events can be reasonably incorporated in working models by use of simulation.

---

Definitions:

Activity Cost Pools

A grouping of all costs related to a particular activity, used in activity-based costing to allocate costs more accurately.

Activity Rate

A rate used to allocate costs to cost objects based on the activities that drive costs, often used in activity-based costing.

Batch Setup

Batch setup involves the processes and activities necessary to prepare equipment and facilities for the production of a batch of goods.

Human Resource Management

The strategic approach to the effective management of people in an organization to help the business gain a competitive advantage.