In the EOQ Inventory Model, the Optimal Order Size Is

question 29

Multiple Choice

In the EOQ inventory model, the optimal order size is achieved when

• A)carrying costs > order costs.
• B)carrying costs < order costs.
• C)carrying costs = order costs.
• D)There is no optimal order size as a smaller size is always better.

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Definitions:

Fixed Manufacturing Overhead

Fixed manufacturing overhead consists of the production costs that do not vary with the volume of production, such as rent for the manufacturing facility, salaries of manufacturing managers, and depreciation of factory equipment.

Selling Price

The price at which a product or service is offered for sale to a buyer.

Markup

The addition to the cost price of items to include overhead expenses and profits.

Total Job Cost

The complete cost associated with a specific job or project, including materials, labor, overhead, and any other costs directly related to the project.