While Working a Simple EOQ Problem, You Notice That, with a Certain

question 18

Multiple Choice

While working a simple EOQ problem, you notice that, with a certain lot size, the annual ordering cost is exactly the same value as the annual inventory carrying cost. Which of the following is true?

• A) the lot size is the economic order quantity
• B) total cost is at its maximum
• C) the annual carrying cost will decrease if the order quantity is increased
• D) all of the above
• E) none of the above; the phenomenon is merely a coincidence

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Definitions:

Marital Status

This denotes whether someone is married, single, divorced, widowed, or has another state of marital connection as recognized by law.

Income

Income refers to the money received by an individual or business for work, from investments, or from various sources over a period, typically used to fund expenses.

Wealth

An abundance of valuable possessions or money, or the total market value of all physical and intangible assets owned by an individual, community, company, or country, minus all debts.

Consumption

The use of goods and services by households, often considered as an economic indicator reflecting the level of consumer spending.