When an Accounts Payable department improves their information system resulting in faster payments to vendors, without the Accounts Receivable Department doing the same, leading to a cash flow crunch, what can we say happened in decision-theoretic terms?
A) optimization
B) profit minimization
C) suboptimization
D) cash flow problems

Question

Quizplus · Accepted Answer

The situation described is an example of suboptimization, where one department made a decision that improved their own performance but negatively impacted another department or the overall organization. The Accounts Payable department optimized their own processes but did not consider the impact on the Accounts Receivable department and overall cash flow.

When an Accounts Payable Department Improves Their Information System Resulting