If D Represents the Level of Decentralization of Corporate Decision

question 24

Multiple Choice

If D represents the level of decentralization of corporate decision making,and A and C are positive constants,then Benefits = B × D and Costs = A × D + C × D².The optimal level of decentralization occurs where the:

• A)horizontal distance between the benefits and costs curves is greatest.
• B)vertical distance between the benefits and costs curves is greatest.
• C)sum of the squares of the distance between the benefits and costs curves is minimized.
• D)level of benefits is greatest.

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Definitions:

Ordering Costs

Expenses related to procuring inventory.

Shipping Costs

Expenses associated with the transportation of goods from the seller to the buyer, which can include packaging, postage, and handling fees.

Purchase Order

A formal document sent by a buyer to a seller with details about a purchase, including quantities and prices of products.

Purchase Contract

A purchase contract is a legal agreement between a buyer and seller detailing the terms and conditions under which a product or property is sold.