If the Actual Order Quantity Is the Economic Order Quantity

question 59

Multiple Choice

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand Q* =

• A) is smaller than the holding cost per unit
• B) is zero
• C) is one-half of the economic order quantity
• D) is affected by the amount of product cost
• E) goes down if the holding cost per unit goes down

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Definitions:

Long-Run Supply

A market condition reflecting the total output of goods and services providers are willing and able to produce, considering all inputs are variable.

Short Run

Refers to a period in which at least one input is fixed, limiting the capacity of the economy or firm to adjust to changes in demand.

Long Run

A period in which all inputs can be adjusted by firms, allowing for full adjustment to market conditions or changes in production technology.

Break-Even Point

The juncture where total expenses match total income, yielding neither profit nor loss.