A Manufacturer Is Contemplating a Switch from Buying to Producing

question 117

Multiple Choice

A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the economic production quantity would be approximately

• A)the same.
• B)20 percent larger.
• C)40 percent larger.
• D)20 percent smaller.
• E)40 percent smaller.

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Definitions:

Reasonable Person

A hypothetical individual who exercises average care, skill, and judgment in conduct and is often used as a standard for determining negligence.

Abnormally Dangerous Activity

Activities that inherently involve a high risk of causing significant harm, where the party conducting the activity may be held strictly liable for any damages.

Discharge of Fireworks

The act of igniting fireworks, which can be subject to local regulations or laws governing their use.

Calvary Assembly of God

A specific local church congregation that is part of the Assemblies of God, a global Pentecostal Christian denomination.