If the Order Quantity Per Order Is 2,000 Units,annual Demand

question 64

Multiple Choice

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

• A)There are 50 orders in the year.
• B)The total annual ordering cost is $250.
• C)The holding cost per unit is $2.50.
• D)The total annual holding costs are $25,000 (= $2.50 * 10,000).

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Definitions:

Standard Deviation of Returns

A measure of the volatility of the returns on an investment, indicating the typical deviation from the average return.

Specific Risk

Specific risk is a type of risk that affects a very small number of assets, also known as unsystematic risk, and is associated with factors unique to a particular company or industry.

Beta

A metric that measures the volatility of an investment relative to the overall market, indicating its level of risk.

Reinvestment Risk

The risk that future cash flows from an investment will not be reinvested at the same rate as the initial investment, affecting the overall return.