If Demand Is Not Uniform and Constant, Then Stockout Risks

question 66

Multiple Choice

If demand is not uniform and constant, then stockout risks can be controlled by

• A) increasing the EOQ
• B) placing an extra order
• C) raising the selling price to reduce demand
• D) adding safety stock
• E) reducing the reorder point

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Definitions:

Business Model Test

The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows.

Cash Flows Characteristics Test

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest.

Financial Asset

An intangible asset deriving value due to a contractual claim, such as cash, stock, bonds, and bank deposits.

Objective Evidence

Objective evidence refers to information, facts, or data that can be quantifiably measured or verified, uninfluenced by feelings, interpretations, or bias.