The coco conomic order quantity model directly determines how much total inventory a firm needs in any one yea total actory costs will be for any one year inventory should be purchased at a time d inventory will be sold per day. a firm loses in sales per day when an inventory item is depleted 8. Which of the following is not a motive for accepting trade credit? trade credit is always free b. signaling value e financial constraint d. transactions cost 9. All else constant, a decrease in the early payment discount leads to a Credit? effective cost of trade a lower b. higher c. no change 10. Which of the following allows retail outlets to purchase in het the peak buying season and de fer payment until after the peak season? a open account b. seasonal dating C. Consignment d. quarterly trade credit 11. The basic principle underlying collection philosophy is to collect the amount owed as close to the credit terms as possible while a. minimizing the cost of capital b. maximizing accounts receivable turnover c. minimizing total collection costs d. preserving customer goodwill 12. Which type of inventory best describes items that have been completely assembled and ready for sale? a. Raw materials b. Work in Progress c. Intermediate Inventory d. Finished Goods Inventory 13. All else constant, a decrease in ordering costs will have what effect on the EOQ? a. Increase b. Decrease c. No change 14. In what way(s) can trade credit policy increase a supplier's revenues? a. Eliminate customers' financial constraints b. Improve customers' knowledge about product quality e. Both A and B d. Neither A or B 15. The main weakness of the uncollected balance percentages method of monitoring collection experience is e. it is biased by increasing or declining sales f. it is biased by whether the percentages are computed for the last quarter or last year g. it is not feasible to compare percentages to management targets h. it is difficult to interpret them when credit sales make up a very large portion of total sales i none of the above