Which of the Following Is Correct for a Firm That

question 58

Multiple Choice

Which of the following is correct for a firm that places orders for an item in amounts greater than the economic order quantity?

• A)the marginal reduction in order cost exceeds the marginal carrying cost per item
• B)the marginal carrying cost per item exceeds the marginal reduction in order cost
• C)total order costs exceed total carrying costs
• D)total cost of ordering and carrying has been maximized

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Definitions:

Linear Programming

A mathematical modeling technique used for achieving the best outcome in a mathematical model whose requirements are represented by linear relationships.

Scarce Resources

Limited or insufficient resources that cannot fully meet the demand when needed.

Labour

The human effort, both physical and mental, used in the production process.

Competitive Bidding

A purchasing process in which suppliers submit bids to win the rights to fulfill a contract.