What Are the Minimum Total Costs of Carrying and Ordering

question 12

Multiple Choice

What are the minimum total costs of carrying and ordering inventory for a firm that sells 1,500 units with a carrying cost of $2 per unit and places orders in lots of 100?

• A)$100
• B)$200
• C)$400
• D)$430 Total carrying costs:
• = carrying cost per unit x average inventory
• = $2 x (100/2)
• = $100

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Definitions:

Behaviorism

A theory in psychology that emphasizes the importance of observable behaviors rather than internal processes such as thoughts and emotions.

Watson

Refers to John B. Watson, an American psychologist who established the psychological school of behaviorism, emphasizing the study of observable behavior.

Skinner

B.F. Skinner was a prominent psychologist and behaviorist known for developing the theory of operant conditioning, which describes how behaviors are influenced by their consequences.

Behaviorists

Psychologists who focus on observable behaviors, rather than internal mental processes, as the subject of their studies.