The Time Period It Takes to Recoup the Original Expense

question 20

Multiple Choice

The time period it takes to recoup the original expense without considering interest payments or other complicating factors is called _____.

• A) internal rate of return
• B) cash flow
• C) simple payback
• D) ROI
• E) inclusion ratio

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Definitions:

Setup Cost

The expenses incurred to prepare equipment or processes for manufacturing or service provision.

Carrying Cost

Expenses associated with holding or storing inventory over a period, including warehousing, insurance, depreciation, and opportunity costs.

Safety Stock

An additional quantity of an item held in the inventory to reduce the risk that the item will be out of stock.

Lead Time

The amount of time that elapses between the initiation and completion of a process.