The Ease of Adjusting Resources in Response to Changes in Demand

question 33

Multiple Choice

The ease of adjusting resources in response to changes in demand defines a firm's

• A)vertical integration.
• B)process flexibility.
• C)customer involvement.
• D)capital intensity.

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Definitions:

Internal Failure Costs

Costs associated with defects found before the delivery of a product to the customer, including scrap, rework, and downtime.

External Failure Costs

Costs that occur when products fail to meet quality standards after being delivered to customers, including returns, repairs, and warranty claims.

Opportunity Costs

The financial impact of skipping the immediate next favorable choice in the process of making a decision.

Net Profit Margin

A financial ratio representing the percentage of revenue that remains as profit after all expenses have been deducted.