In the Basic EOQ Model,if Lead Time Increases from Five

question 78

Multiple Choice

In the basic EOQ model,if lead time increases from five to 10 days,the EOQ will:

• A) double.
• B) increase, but not double.
• C) decrease by a factor of two.
• D) remain the same.
• E) none of these.

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Definitions:

FCFF

Free Cash Flow to the Firm; a measure of financial performance that shows how much cash is generated by a company after accounting for capital expenditures and operating expenses.

EBIT

Stands for Earnings Before Interest and Taxes, a measure of a firm's profit that includes all incomes and expenses except interest and income tax expenses.

Depreciation

The gradual reduction in the fair market value of tangible assets over time due to use, wear, and tear or obsolescence.

Dividend Increase

An action by a company to raise the amount of dividends paid per share, often seen as a sign of the company's strong financial health and future prospects.