Consider a Business That Can Be Run Using a Make-To-Stock

question 30

Multiple Choice

Consider a business that can be run using a make-to-stock or make-to-order process. Further suppose that your demand is 10000 per month and is spread out during the month. Capacity of both processes is 15000 per month.Based only on this information, what would be the best choice?

• A)Choose Make-to-stock process.
• B)Choose make-to-order process.
• C)Either A or B.
• D)Both A and B
• E)None of the above.

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Definitions:

Financial Lease

A type of lease in which the lessee has use of the asset for a significant portion of its useful life, and the lease payments are designed to cover the lessor's initial costs.

Debt-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Relevant Discount Rate

The interest rate used to discount future cash flows to their present value to account for the risk and time value of money in decision making.

Cost of Borrowing

The total charges, including interest and any other fees, that a borrower incurs when taking out a loan.