What Is the Average Inventory Level, Based on EOQ, for a Firm

question 63

Multiple Choice

What is the average inventory level, based on EOQ, for a firm that has annual sales of 2,500 units, costs per order of $45, and carrying costs of $5 per unit?

• A)35
• B)75
• C)106
• D)237 EOQ =
• = 212

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Definitions:

Technologically Progressive Industry

An industry characterized by rapid and continuous technological innovation, leading to dynamic growth and evolution of its products and services.

Long-Run Supply Curve

A graphical representation showing the quantities of a good or service that a firm is willing and able to supply at different prices over a period where all inputs can be varied.

Constant-Cost Industry

Constant-Cost Industry refers to an industry in which the input prices do not change as industry output changes, leading to a flat supply curve.

Long-Run Equilibrium

A state where all factors of production and inputs can be adjusted by firms, and no economic forces are inducing firms to change their output or production levels.