A Product Has Demand of 4000 Units Per Year

question 107

Multiple Choice

A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order

• A) all 4000 units at one time
• B) 200 units per order
• C) every 20 days
• D) 10 times per year
• E) none of the above

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Definitions:

Demand for Good

Demand for good refers to the quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services supplied and demanded at the equilibrium price, where the quantity demanded equals the quantity supplied, leading to market stability.

Demand Decreases

A situation where the desire or need for a product or service declines, often leading to lower prices and adjustments in supply.

Supply Increases

Occurs when the quantity of a good or service that a market can offer rises.