Scenario C.3 Consider an Item with the Following Discrete Demand Distribution for Distribution

question 8

Multiple Choice

Scenario C.3
Consider an item with the following discrete demand distribution for a one-period inventory decision.

This item experiences a seasonal demand pattern. A profit of $15 per unit is made if the item is sold in season, but a loss of $10 per unit is incurred if the item is sold after the season is over.
-Use the information in Scenario C.3. What is the payoff when 40 units are ordered but a demand of 50 materializes?

• A) $150
• B) $300
• C) $450
• D) $600

Understand the components and calculations of return on investment (ROI) for operating assets.

Identify the role and structure of a balanced scorecard in performance measurement.

Differentiate between value-added and non-value-added activities within a business process.

Analyze the impact of financial and nonfinancial measures on future financial performance.

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Definitions:

Total Assets

The sum of all current and long-term assets owned by a company, reflecting the total resources at its disposal.

Internal Growth Rate

The maximum growth rate a company can achieve with its existing assets without having to finance growth with external equity or debt.

Retention Ratio

The portion of net income that is retained by a company instead of being paid out as dividends to shareholders, usually expressed as a percentage.

Plowback Ratio

Also known as the retention rate, it refers to the portion of earnings that a company retains and reinvests in its operations rather than distributing as dividends.