Which of the Following Is the Major Benefit to a Firm

question 58

Multiple Choice

Which of the following is the major benefit to a firm of using just-in-time inventory management?

• A) minimizes the risk of stock-outs
• B) minimizes the total number of orders that the firm places
• C) reduces acquisition costs for placing goods in inventory
• D) largely eliminates the carrying costs of maintaining a large inventory

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Definitions:

Spot Rate

The immediate market value at which a particular currency can be acquired or disposed of.

Forward Contract

A financial derivative that represents a contract between two parties to buy or sell an asset at a specified future date for a price that is agreed upon today.

Fair Value Hedge

A hedging strategy used to mitigate risk by matching the fair value of an asset or liability through a financial derivative.

Merchandise Inventory

Goods held by a business for the purpose of sale to customers in the ordinary course of business.