Which would cause average inventory holdings to decrease

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Reference no: EM132769634

Problem 1: Which of the following would cause average inventory holdings to decrease, other things constant?

a. Fixed order costs double
b. The purchase price of inventory items decreases by 50%
c. The carrying cost of an item decreases (as a percent of purchase price)
d. The sales forecast is revised downward by 10 percent
e. None of the above (all would cause average inventory to increase)

Problem 2: Which of the following statements is false?

a. In addition to sales price, product quality, and advertising, credit policy is a major controllable variable which can affect product demand
b. Sharp seasonal swings in sales and fast growth are two reasons why a firm's aging schedule and DSO may show high variability
c. Changes in a firm's collection policy can affect sales and working capital but will not affect additional funds needed
d. Cash discounts can be used to influence a firm's sales volume and ts DSO

Reference no: EM132769634

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