A Product Has Demand of 4000 Units Per Year

question 107

Multiple Choice

A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order

• A) all 4000 units at one time
• B) 200 units per order
• C) every 20 days
• D) 10 times per year
• E) none of the above

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Definitions:

Fair Value Method

An accounting approach used to measure and report the actual or estimated market value of an asset or liability at the present time.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee but does not control it.

Dividends

Money distributed by a corporation to its members, sharing a part of the company's income.

Investment Adjustment

The process of modifying the value of an investment portfolio due to changes in asset values, investment performance, or investment strategy.