CBSE 2025, Set 1

Question

There are two Statements, Assertion (A) and Reason (R).
Assertion (A): Larger the lead time, larger is the quantity of material required to be stored and larger shall be the amount of working capital required.
Reason (R): If the raw material do not have a record of un-interrupted availability, higher stock levels may be required.
Choose the correct alternative from the alternatives given below: A). Assertion (A) is false and Reason (R) is true. B). Both Assertion (A) and Reason (R) are false. C). Assertion (A) is true and Reason (R) is false. D). Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Edvaya · Accepted Answer

The correct answer is Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).. Both statements are true. Assertion highlights that high lead time requires more stock and working capital. Reason supports this by explaining that irregular availability (which necessitates lead time buffering) requires maintaining higher stock levels to ensure uninterrupted production.

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Business Studies > Business Finance > Financial Management

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