Answer to Question 1
Answer: An optimistic manager sees strong sales and a healthy business climate. In essence, she sees the sky as the limit for the upcoming year, so she wants to maximize her return for this prosperous period. In order to do this, the manager chooses a maximax strategy in which she is looking to find the path that will give her the greatest possible return for her investment of time and energy. Theoretically, this strategy may have a greater downside, but in an optimistic situation, a manager will tend to accept this greater risk to maximize the possible upside of the situation.
Answer to Question 2
Answer: FALSE
Explanation: The variable V for the value or purchase price of the product is part of the formula for computing EOQ.
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