If the Marginal Reduction in Order Costs Exceeds the Marginal

question 43

Multiple Choice

If the marginal reduction in order costs exceeds the marginal carrying cost of inventory,then:

• A) the firm has minimized its total carrying costs.
• B) the firm should increase its order size.
• C) the firm should decrease its order size.
• D) the firm has maximized its order costs.

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Definitions:

Supersized Menu

A menu option in fast-food restaurants that offers larger portions of food items for a relatively small additional cost, often criticized for contributing to overeating and obesity.

Dessert Buffet

A meal or display that offers a variety of sweet dishes, such as cakes, pies, and pastries, for self-service.

Incentive

A thing that motivates or encourages someone to do something, often seen as a reward or punishment scheme in behavioral psychology.

Drive

An inner motivation or urge that propels an individual to act or achieve certain goals.