The Formula for Total Carrying Cost Is

question 89

Multiple Choice

The formula for total carrying cost is

• A)number of orders per year ´ cost of placing an order.
• B)number of orders per year/cost of placing an order.
• C)average number of units in inventory ´ cost of carrying one unit in inventory.
• D)average number of units in inventory/cost of carrying one unit in inventory.
• E)ordering cost + carrying cost.

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Definitions:

Real Income

The amount of goods and services that can be purchased with nominal income during some period of time; nominal income adjusted for inflation.

Increase in Price

A rise in the cost of goods or services, often due to factors like inflation, increased demand, or production costs.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.

Fixed Money Income

An income level that remains constant and does not adjust for inflation or economic conditions.