Which of the Following Statements About the Basic EOQ Model

question 148

Multiple Choice

Which of the following statements about the basic EOQ model is False?

• A) If the setup cost were to decrease, the EOQ would fall.
• B) If annual demand were to double, the number of orders per year would increase.
• C) If the ordering cost were to increase, the EOQ would rise.
• D) If annual demand were to double, the EOQ would also double.
• E) All of the above statements are true.

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Definitions:

Arrearage

A legal term for the part of a debt that is overdue after missing one or more required payments.

Preferred Shareholders

Investors who own preferred shares in a company, giving them priority over common shareholders in the distribution of dividends and assets.

Dividend Distributions

Payments made by a corporation to its shareholders, usually derived from the company's earnings.

Cumulative Voting

A voting system that allows shareholders to concentrate their votes on a single candidate for the board of directors.