The High-Rise Building Company (HRBC)uses 400,000 Tons of Stone Per

question 35

Multiple Choice

The High-Rise Building Company (HRBC) uses 400,000 tons of stone per year. The carrying costs are $100/ton. The cost per order is $500. Calculate the optimal carrying costs. (Assume a linear usage rate and that HRBC runs its inventory down close to zero as the replenishment order arrives.)

• A)$200,000
• B)$100,000
• C)$75,000
• D)$50,000

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Definitions:

Implied Novation

A legal concept where a new contract is assumed to replace an old one due to the actions or situations of the parties involved, without this being explicitly stated.

Actual Novation

The replacement of an existing obligation with a new one, extinguishing the original obligation and creating a new contract with different terms.

Buyout Price

The agreed amount for which an ownership interest in a business can be purchased outright.

Court Order

A formal instruction issued by a court that requires a person or entity to do or not do something.