Which of the following costs will tend to increase if a firm switches to a restrictive short-term financial policy from a flexible short-term policy?
I.lost sales due to out-of-stock items
II.inventory warehousing costs
III.cash-outs
IV.total annual order costs

Question

Quizplus · Accepted Answer

A restrictive short-term financial policy typically involves holding lower levels of inventory and cash, which can lead to increased lost sales due to out-of-stock items (I) and higher total annual order costs (IV) due to more frequent ordering. Cash-outs (III) may also increase as less cash is held on hand. Inventory warehousing costs (II) would likely decrease, not increase, as less inventory is held.

Which of the Following Costs Will Tend to Increase If