The Buyer Must Decide Whether to Accept a Quantity Discount

question 15

Multiple Choice

The buyer must decide whether to accept a quantity discount and must consider ____________costs.

• A) ordering and carrying
• B) purchase
• C) purchase and ordering
• D) purchase, order, and carrying

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Definitions:

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, taxes, depreciation, and opportunity costs.

Economic Order Quantity

A formula that calculates the optimal order size to minimize the sum of ordering, carrying, and stockout costs.

Stock

Shares of ownership in a corporation or assets that represent an ownership interest.

Shortage Costs

The costs incurred when demand exceeds supply, including lost sales, expedited shipping fees, and decreased customer satisfaction.