LAMA Creations Creates Sweaters Using the Wool of the Llama

question 24

Multiple Choice

LAMA Creations creates sweaters using the wool of the Llama. The wool used in the manufacturing process is ordered by the bundle. LAMA requires 1,200 bundles of Llama wool per year and places orders of 100 bundles at a time. The cost of ordering is $80.00 per order and the carrying cost per bundle is $3.50. What is the economic order quantity for Lama Creations.

• A) 235 bundles
• B) 117 bundles
• C) 470 bundles
• D) 200 bundles

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Definitions:

Service Customization

The process of tailoring services to meet the specific needs and preferences of individual customers or market segments.

Process Regrouping

The reorganization of tasks, operations, or workflows within a business or project to increase efficiency, clarity, or effectiveness.

Location Economies

Cost advantages that a firm obtains by operating in a particular geographical area.

Cost-Leadership Strategy

A business approach focused on gaining a competitive advantage by minimizing costs while maintaining acceptable quality, aiming to offer the lowest prices in the market.