Which of the Following Equations Determines the Total Annual Ordering

question 64

Multiple Choice

Which of the following equations determines the total annual ordering costs?

• A)Cost of placing an order times the order quantity.
• B)Cost of placing an order times the number of orders per year.
• C)Cost of placing an order times one-half of the order quantity.
• D)Unit carrying costs per year times the order quantity.

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Definitions:

Capital Budgeting

The process by which investors and managers decide which long-term projects or investments a business should undertake, based on potential profitability.

What-If Questions

Scenario-based queries used to assess the impact of potential changes or decisions in a given situation.

Base Case NPV

The Net Present Value calculated under baseline assumptions, used as a standard to evaluate the viability of an investment.

Discounted Payback

A capital budgeting method that calculates the time required to recoup the investment in a project, by taking into account the present value of expected cash flows.