Alabaster Manufacturing Company Increased the Size of Several Inventory Order

question 92

Multiple Choice

Alabaster Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model. What is the impact on the total amount of annual carrying and ordering costs?

• A)no change
• B)increase
• C)decrease
• D)cannot be determined

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Definitions:

Recessionary Gap

A situation in macroeconomics where actual output is less than the potential output of an economy, often marked by high unemployment.

Short-Run Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period, assuming that the prices of inputs remain constant.

Sticky Prices

Refers to the resistance of prices to change, despite shifts in the broader economy or a product's supply and demand.

Price Level

An index or average that reflects the overall price of goods and services in an economy at a given time, often used to measure inflation or deflation.