Graphically depict shortage costs, carrying costs, and the total cost curve showing the optimal
investment in current assets (Costs on the vertical axis, current assets on the horizontal axis.) Be
sure to label the optimal level of current assets. Using the same format, illustrate what a ﬂexible
short-term ﬁnancing policy looks like and also illustrate what a restrictive policy looks like.

Question

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The Answer of Graphically depict shortage costs, carrying costs, and the total cost curve showing the optimal
investment in current assets (Costs on the vertical axis, current assets on the horizontal axis.) Be
sure to label the optimal level of current assets. Using the same format, illustrate what a ﬂexible
short-term ﬁnancing policy looks like and also illustrate what a restrictive policy looks like.

Graphically Depict Shortage Costs, Carrying Costs, and the Total Cost