Zanda Corp.and Jones Corp.are identical in every way (products produced, costs, demand, etc.) except for one.Zanda uses a level production plan while Jones prefers a chase production plan.Which of the following is most likely to be true?
A)Zanda will have higher investment in plant and equipment.
B)Zanda will have higher hiring and firing costs.
C)Zanda will have higher inventory carrying costs.
D)Zanda will have lower total production costs.

Question

Quizplus · Accepted Answer

With a level production plan, Zanda will have to produce goods in advance and maintain a higher level of inventory to meet demand during periods of low production. This will result in higher inventory carrying costs compared to Jones, which can adjust production to match demand and maintain lower inventory levels. The other options are not necessarily true as they depend on the specific details of the companies' production processes.