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 higher overtime costs.

Question

Quizplus · Accepted Answer

With a level production plan, Zanda will produce a consistent amount of inventory throughout the year, resulting in higher inventory carrying costs. Jones, on the other hand, with a chase production plan, will only produce what is needed to meet demand, which will result in lower inventory carrying costs. Therefore, choice C is most likely to be true.