The Demand for Motorcycle Tires Imported by Dixie Import-Export Is

question 103

Short Answer

The demand for motorcycle tires imported by Dixie Import-Export is 60,000/year and may be assumed to be uniform throughout the year. The cost of ordering a shipment of tires is $600, and the cost of storing each tire for a year is $2.
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Determine how many tires should be in each shipment if the ordering and storage costs are to be minimized. (Assume that each shipment arrives just as the previous one has been sold.)
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__________ tires

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Definitions:

Production Possibilities Curve

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology.

Unemployment Rate

The fraction of the labor market actively in pursuit of work but is currently jobless.

Opportunity Cost

The expense associated with giving up the second-best choice in favor of opting for the preferred alternative in any decision-making process.

Production Possibilities Frontier

A graph that represents the highest possible production levels for two or more products, based on available inputs such as resources and labor.