Answer:
The Bullwhip Effect
Explanation:
Bullwhip effect is a phenomenon that occurs in an organisation's channel of distribution due to swings or erratic demands for products by customers. This erratic nature of demands will usually lead to forecasting inefficiencies especially in meeting the demands through the supply chain.
A sudden increase in demand could lead to production planning problems because there might not be enough inventory of materials on ground to meet the demand. Also, a sudden decrease in demand can bring the challenge of excess inventory of materials which may not be needed for production for a while.
One of the measures taken to manage this erratic nature of demands is to ensure that whatever the forecasts for demands is, safety stock must be included to the forecast level of demand so as to ensure that production planning is adequate and the demands are met as well.
Answer: The Answer IS A.
Explanation: fail to Intersect
The receiver's understanding depends on how the message was interpreted by the receiver.
Answer:
D) has sunk costs of $6,000
Explanation:
Sunk cost is a cost which does not effect the financial decision, as this cost has already been incurred, and now it cannot be revoked.
Here maintenance cost is a regular expense which has to be incurred, and its not the cost which has already been incurred, same applies for operating cost.
Two years ago firm had spent $6,000 upgrading the equipment which was incurred earlier and now that cost cannot be revoked, further it will not lay any impact on any of the decisions made by the financial management.
Further amount to be spend of $5,000 has yet to be incurred and the decision to incur such cost can also be avoided, therefore it is not a sunk cost.
In this scenario D) has sunk sunk cost of $6,000
