The EOQ Formula Considers the ______

question 56

Multiple Choice

The EOQ formula considers the ______.

• A)ordering costs,holding costs,and quantity discounts
• B)holding costs and quantity discounts
• C)ordering costs and quantity discounts
• D)ordering costs and holding costs

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Definitions:

Average Variable Cost

The total variable costs of production divided by the quantity of output produced; it shows the variable cost per unit.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, decreases as production increases.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of production.

Economies of Scale

Cost advantages obtained by an increase in production, leading to a reduction in average costs per unit.