How Does Pull-Through Production Help Minimize Inventories in a Just-In-Time

question 1

Multiple Choice

How does pull-through production help minimize inventories in a just-in-time operating environment?

• A) Products are made in anticipation of customer demand.
• B) Products are made only when customer orders are received.
• C) Products are made in large production runs.
• D) Products are made identically.

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Definitions:

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Payback Period

The length of time it takes for an investment to generate cash flows sufficient to recover the initial investment cost.

Project's Liquidity

An assessment of a project's ability to convert its assets to cash quickly without significant loss in value, to meet short-term obligations.

WACC

Weighted Average Cost of Capital (WACC) is the average rate of return a company is expected to pay its security holders to finance its assets.