Hannafin Company Decreased the Size of Inventory Order Quantities Below

question 45

Multiple Choice

Hannafin Company decreased the size of inventory order quantities below the quantity determined by EOQ. If annual quantity demanded remains the same, the number of orders made during the year will:

• A) Increase
• B) Not change
• C) Decrease
• D) Cannot be determined from the information given

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Definitions:

Liquidated Damages Clause

A provision in a contract that pre-determines the amount of damages to be paid if one party breaches the agreement.

Enforceable

A term that describes a contract or agreement that can be legally upheld and compelled by the court system.

Specific Performance

A legal remedy where a court orders a party to perform a specific act, usually indicated in a contract, as opposed to awarding damages.

Consequential Damages

Losses that do not flow directly from an act but only from some of the consequences or results of such act.