Final answer:
Characteristics that lead to reducing the risk of obsolescence and lower asset investment are indicative of higher turnover. This involves more frequent inventory cycling and less capital tied up in stock. Additionally, understanding economies of scale and cost-effective production technology selection is essential for cost management. Therefore, correct option is d.
Step-by-step explanation:
To reduce the risk of obsolescence and lower the asset investment are both characteristics of higher turnover. Higher turnover means that inventory cycles through more quickly, which can reduce the risk of obsolescence as you are less likely to be stuck with out-of-date inventory.
It also means a reduced asset investment because less money is tied up in inventory that sits in the warehouse.
In the context of production technology and cost management, a firm must consider the trade-off between labor and capital investments.
For example,, if the cost of machines increases, a shift toward less capital-intensive methods (more labor) would be expected to maintain cost-efficiency. Conversely, when machine hours become cheaper, a shift towards more capital-intensive methods (less labor) is sensible.
Understanding economies of scale is also critical. As the firm's output quantity increases, economies of scale allow for the cost per unit to decrease.
This principle supports the operations of large warehouse stores such as Costco or Walmart, where operating at a larger scale can lead to lower average costs compared to smaller operations.