When Using the Economic Order Quantity Model

question 4

Multiple Choice

When using the economic order quantity model

• A) ordering costs increase as the level of inventory increases.
• B) carrying costs decrease as the level of inventory increases.
• C) costs are minimized when total carrying costs and total ordering costs are equal.
• D) None of the options are true.

---

Definitions:

Patents

Legal documents granted by the government giving an inventor exclusive rights to manufacture, use, or sell an invention for a certain number of years.

Innovation Incentives

Mechanisms or policies designed to encourage the development and implementation of new ideas, products, or methodologies.

Monopoly Power

The degree of control a company has over a market, enabling it to set prices or exclude competition.

Production Costs

The total expenses incurred in the manufacturing of a product or the providing of a service, including raw materials, labor, and overheads.