The Economic Order Quantity Model Is Designed to Determine How

question 160

Multiple Choice

The economic order quantity model is designed to determine how much:

• A) Total inventory a firm needs in any one year.
• B) Total inventory costs will be for any one year.
• C) Inventory should be purchased at a time.
• D) Inventory will be sold per day.
• E) A firm loses in sales per day when an inventory item is depleted.

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Definitions:

Perfectly Inelastic Demand

A situation where the demand for a product remains constant regardless of changes in its price.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with its demand either being elastic or inelastic.

Total Revenue

Total financial gains received by a firm from its commercial sales and service operations throughout a defined period.

Elastic

A characteristic of a supply or demand curve that describes how much the quantity supplied or demanded responds to changes in price.