Which of the Following Situations Is Most Likely to Pose

question 62

Multiple Choice

Which of the following situations is most likely to pose a problem for companies that use return on investment (ROI) as a measure of a manager's performance?

• A) Managers may be encouraged to purchase more operating assets than they otherwise should.
• B) Managers may be discouraged from purchasing operating assets that could improve overall profitability.
• C) Managers may be discouraged from reducing their division's costs.
• D) Managers may be discouraged from paying off debt in order to reduce interest costs.

Understand the role of disaggregation in translating aggregate plans into specific production schedules, such as the Master Production Schedule.

Grasp the advantages and limitations of graphical techniques in aggregate planning.

Evaluate the impact of workforce adjustment strategies, such as hiring, layoffs, and the use of part-time workers, on cost and quality.

Understand how demand manipulation strategies, like advertising and promotion, influence aggregate planning.

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Definitions:

Profits

The financial gain achieved when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

Joseph Schumpeter

An economist known for his theory on business cycles and for coining the term "creative destruction" to describe the process of innovation in economics.

Innovations

The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Clusters

Geographic concentrations of interconnected companies, specialized suppliers, and service providers in a particular field that are thought to increase competitiveness and innovation.