Chocolate Ltd Uses 18,000 Litres of Chocolate Syrup Each Year

question 24

Multiple Choice

Chocolate Ltd uses 18,000 litres of chocolate syrup each year. The cost of carrying its chocolate syrup inventory is $0.50 per litre per year. The cost of ordering the syrup is $150 per delivery. The firm uses chocolate syrup at a constant rate throughout the year. The economic order quantity for chocolate syrup is:

• A) 5,723 litres.
• B) 9,487 litres.
• C) 3,286 litres.
• D) 2,900 litres.

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Definitions:

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors, leading to more efficient economic outcomes.

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Information and statistics regarding the quantity and quality of goods and services produced within an economy.

U.S. GDP

The gross domestic product of the United States, a measure of the economic output of the entire country within a specific time frame.

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Economic policy of restricting imports from other countries through methods such as tariffs and import quotas, to protect domestic industries.