Albuquerque Company Has the Following Information Available Concerning One of Its

question 74

Multiple Choice

Albuquerque Company has the following information available concerning one of its inventory items: $$\begin{array} { l r } \text { Cost of placing an or der } & \$ 50.00 \\\text { Unit carrying cost per year } & \$ 2.00 \\\text { Annual unit demand } & 3,200 \\\text { Safety stock } & 80 \\\text { Average daily demand } & 10 \\\text { Normal lead time in days } & 12\end{array}$$ The economic order quantity for this item is

• A)16 units.
• B)160,000 units.
• C)500 units.
• D)400 units.

---

Definitions:

Novation

The creation of a new contract through the substitution of a third party for one of the original parties to a contract by the consent of all.

Third Party

An entity not directly involved in a transaction or legal agreement but who may be affected by it.

Force Majeure

A contractual clause that frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs.

Contract Termination

The legally sanctioned end of a contract's validity, which can occur due to fulfillment, mutual agreement, or breach by one of the parties.