The Larger the Minimum Efficient Scale of a Plant Relative

question 12

Multiple Choice

The larger the minimum efficient scale of a plant relative to total global demand,the greater is the argument for:

• A)decentralizing production in multiple locations.
• B)centralizing production in a single location or a limited number of locations.
• C)achieving location economies by operating in multiple locations.
• D)centralizing production in multiple locations.

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Definitions:

Average Daily Cost

The total cost associated with a process or product divided by the number of days in the period being considered.

Days' Sales

A financial metric, often calculated as days sales outstanding (DSO), that measures the average number of days it takes a company to collect payment after a sale has been made.

Retail Method

An inventory valuation method used by retailers that estimates inventory value by applying a cost to retail price ratio.

Estimated Cost

An approximation of the cost for goods or services, projected based on current information and past experience.