You Work as a Forecaster for the Major Producer of Digital

question 88

Multiple Choice

You work as a forecaster for the major producer of digital cameras. You know that there is a strong positive relationship between the demand for digital cameras and the birth of a first child. A report has just been issued predicting that the birthrate is expected to increase steadily over the next 10 years. You should recommend which of the following courses of action to the firm?

• A) Don't change the amount of investment made, but raise the price of digital cameras in response to the expected increase in the demand.
• B) Suggest that the investment in new capital to produce digital cameras be made only after it can be verified that the birthrate has increased.
• C) Start to increase investment now so that when the birthrate increases and the demand for digital cameras increases, the firm will be able to meet that new demand.
• D) Suggest that the firm curtail its advertising to avert a substantial increase in demand for digital cameras.

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Definitions:

Internal Failure Cost

Costs associated with defects found before the product reaches the customer, such as scrap and rework expenses.

Rework Defective Units

The process of correcting defects in products, typically requiring additional resources and time, impacting the overall cost of production.

Appraisal Cost

Expenses related to the process of determining the quality of products or services, such as inspection and testing costs.

Test And Inspection

Processes aimed at ensuring that products or services meet the required quality standards before they reach the customer.