Suppose You Run a Simulation Model Several Times with Different

question 9

Multiple Choice

Suppose you run a simulation model several times with different order quantities.What can we infer about the quantity that maximizes the output,the company's profit?

• A) This quantity is the optimal order quantity.
• B) This quantity might be the optimal order quantity,but we also need to consider the company's attitude toward risk.
• C) This is not necessarily the optimal order quantity,because it may have produced the largest profit by luck.
• D) We can't infer anything.

---

Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net profit or loss.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price, allowing issuers to refinance debt if interest rates decline.

Fair Market Price

The price that a willing buyer and a willing seller agree upon, assuming both parties have reasonable knowledge of the item's relevance and are under no pressure to buy or sell.

Loss On Redemption

The loss incurred when a debt obligation or security is redeemed before its maturity date at a value less than the original purchase price or par value.