Which One of the Following Statements Represents an Advantage of the P

question 205

Multiple Choice

Which one of the following statements represents an advantage of the P system over the Q system?

• A) Less safety stock is carried to achieve the same service level.
• B) The replenishment intervals can be more easily individualized for items.
• C) Orders can be more easily combined to the same supplier.
• D) A P system is more suitable for quantity discounts and capacity limitations.

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.

Complementary Goods

Products or services that are typically consumed together, where the demand for one increases the demand for the other.

Inelastic

Describing demand that changes little with price fluctuations; consumers’ buying habits are not significantly affected by price changes.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, demonstrating the sensitivity of consumers to price changes.