What Is the Economic Order Quantity for Firm That Sells

question 43

Multiple Choice

What is the economic order quantity for firm that sells 30,000 units annually, each unit has a $6 carrying cost, and the fixed cost of placing an order is $100?

• A)100 units
• B)122 units
• C)707 units
• D)1,000 units

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing for all possible adjustments in production and operations.

Break-Even

The point at which total cost and total revenue are equal, meaning the business or project is not making a loss nor profit.

Peak Efficiency

Peak Efficiency is the optimal state of operation where resources and processes produce maximum output with minimum waste or inefficiency.

ATC Curve

The Average Total Cost curve graphically represents the total cost per unit of output produced, calculated by dividing the total cost by the quantity of output.