Which of the following costs will tend to increase if a firm switches from a flexible short-term policy to a restrictive short-term financial 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 maintaining lower levels of inventory and cash, which can lead to increased lost sales due to out-of-stock items (I) and increased cash-outs (III) due to less liquidity. Additionally, total annual order costs (IV) may increase as more frequent orders are needed to maintain lower inventory levels. Inventory warehousing costs (II) would likely decrease, not increase, as less inventory is held.

Which of the Following Costs Will Tend to Increase If