Question detail
EcoWash serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?5,205, sales of 720 units, and a 26% change in costs or demand. Which option best applies Explain the benefits and costs of holding spare stock and buffer stock?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
The role of procurement
Question
- A. Use stock, buffer stock to judge gross profit margin, suppliers impact, and the business objective in Managing stock.
- B. Give only a definition of The role of procurement without using the case evidence.
- C. Treat cash flow and profit as identical and ignore the effect on suppliers.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use stock, buffer stock to judge gross profit margin, suppliers impact, and the business objective in Managing stock.
Explanation
This answer fits the scenario because Use stock, buffer stock to judge gross profit margin, suppliers impact, and the business objective in Managing stock. The case evidence gives ?6,705, 720 units, and 26%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse cash flow and profit, miss the suppliers, or ignore the business objective.
Common mistake
Managing stock common mistake 1
Giving a vague answer instead of directly addressing: Explain the benefits and costs of holding spare stock and buffer stock..
Answer by clearly explaining how to explain the benefits and costs of holding spare stock and buffer stock..
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