When Considering the Purchase of a Large Central System, Such

question 6

Multiple Choice

When considering the purchase of a large central system, such as power generation or computer networks, firms have to decide how big a system to acquire and whether, and, if so, how to charge users for it subsequently. Which is true? $\begin{array}{|l|l|l|}\hline &\text { Charge } & \text { Likely consequence } \\\hline \text { a. } & \text { Done } & \begin{array}{l}\text { Firm acquires more capacity than } \\\text { needed }\end{array} \\\hline\text { b. } & \text { Full cost } & \begin{array}{l}\text { Demand for resource equals } \\\text { capacity }\end{array} \\\hline\text { c. } & \text { Depreciation } & \begin{array}{l}\text { Firm acquires less capacity than } \\\text { needed }\end{array} \\\hline \text { d. } & \begin{array}{l}\text { Depreciation } \\\text { only }\end{array} & \begin{array}{l}\text { Demand for resource equals } \\\text { capacity }\end{array} \\\hline \text { e. } & \begin{array}{l}\text { None of the } \\\text { above }\end{array} & \\\hline\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D
• E)Option E

Grasp the significance of safety stocks and their impact on average inventory and economic order quantity (EOQ).

Understand the calculation of average accounts receivable balance in relation to sales and credit terms.

Assess the financial impact of granting credit to new customers and the NPV of such decisions.

Understand how the operating cycle and inventory period affect a firm's accounts receivable and inventory management.

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Definitions:

Direct Format

A communication style that is straightforward and clear, minimizing misunderstanding by stating information explicitly.

Delivering Bad News

The process of communicating unfavorable or disappointing information to someone in a sensitive and thoughtful manner.

Five Goals

A set number of objectives intended to be achieved, often referenced in planning and strategy contexts.

Direct Approach

A straightforward method of dealing with a situation or problem, often characterized by clear, explicit communication or action.