Soft Cushion Company Is Highly Decentralized

question 17

Multiple Choice

Soft Cushion Company is highly decentralized.Each division is empowered to make its own sales decisions.The Assembly Division can purchase stuffing,a key component,from the Production Division or from external suppliers.The Production Division has been the major supplier of stuffing in recent years.The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per pound for the next year.The Production Division recently increased its unit price to $40.The manager of the Production Division presented the following information - variable cost $32 and fixed cost $8 -to top management in order to attempt to force the Assembly Division to purchase the stuffing internally.The Assembly Division purchases 20,000 pounds of stuffing per month. What would be the monthly operating advantage (disadvantage) of purchasing the goods internally,assuming the external supplier increased its price to $50 per pound and the Production Division is able to utilize the facilities for other operations,resulting in a monthly cash-operating savings of $30 per pound?

• A) $1,000,000
• B) $360,000
• C) $(240,000)
• D) $(400,000)

Understand the basic concepts and functions of inventory management.

Differentiate between various inventory systems and models, including P and Q systems.

Apply mathematical models to solve inventory problems, including EOQ and quantity discount problems.

Identify the components and calculations of inventory costs, including holding, setup, and ordering costs.

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Definitions:

Conscientiousness

An indicator of personality that captures a person's organizational skills, their ability to be depended upon, and their deep commitment to what they owe.

Social Science Research

The study of society and social relationships through various methods to understand human behavior and social structures.

Large Samples

An approach in research that involves collecting data from a large number of participants or instances, enhancing the statistical reliability of results.

Statistically Significant

Indicating that the probability of an observed difference or relationship occurring by chance is low, typically below a predefined threshold of significance.