A Manufacturer Is Contemplating a Switch from Buying to Producing

question 129

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 maximum inventory would be approximately

• A)70 percent higher.
• B)30 percent higher.
• C)the same.
• D)30 percent lower.
• E)70 percent lower.

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Definitions:

Welfare Recipients

Individuals or families that receive assistance from government programs designed to support those in financial need.

Poverty Line

A threshold set to measure income levels below which individuals or families are considered to be living in poverty, based on the ability to afford basic needs.

Minimum Hourly Wage

The lowest legal hourly pay that workers can receive, which is set by government law or regulation.

Wage Earner

An individual who receives a salary or wages in exchange for labor or services provided to an employer.