Management Wishes to Use an FOQ Lot-Sizing Rule for an Item

question 99

Multiple Choice

Management wishes to use an FOQ lot-sizing rule for an item based on the economic order quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and the setup cost is $50 per lot, which one of the following fixed-order quantities is most appropriate?

• A) 90 units
• B) 110 units
• C) 130 units
• D) 150 units

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Definitions:

Core Processes

The essential activities and procedures that are central to an organization's function and value creation.

Work Processes

The sequence of steps or activities that are undertaken to achieve organizational goals or produce goods and services.

Coordinated Tasks

Activities that require synchronization and collaboration among various participants to achieve a common goal.

Value Chain Analysis

An analytical process for identifying each step in a business's operations and how they contribute to the overall value added to products or services.