E&OE Is Trying to Minimize Its Inventory Costs, Which Are

question 114

Multiple Choice

E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing only once a product is ordered. Which of the following will be true for E&OE?

• A) Short production runs will be more expensive than longer ones.
• B) Setup and order-processing costs will be high.
• C) The order point will be high.
• D) Order-processing costs will be lower than the inventory-carrying costs.
• E) E&OE can reduce the average cost per unit by producing a long run.

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