When Product Demand Is High,firms Following a "Middle of the Road

question 118

Multiple Choice

When product demand is high,firms following a "middle of the road policy" for long- versus short-term financing will:

• A) borrow short term.
• B) borrow long term.
• C) hold marketable securities.
• D) sell marketable securities.

---

Definitions:

EOQ Lot-Sizing

Economic Order Quantity (EOQ) is a formula used to determine the optimal quantity of stock to minimize the total costs of inventory management.

Setup Cost

The expenses incurred to prepare equipment or processes for manufacturing an order or batch of goods, typically involving preparation time and materials.

Inventory Holding Cost

Expenses related to storing unsold goods, including warehousing, security, insurance, and deterioration or obsolescence.

Product Structure Tree

A hierarchical representation of all the components and sub-components required to build a product, showing the relationship between the parts and the quantities needed.