Assume You Have Been Assigned the Task of Identifying a Level

question 27

Multiple Choice

Assume you have been assigned the task of identifying a level strategy aggregate production plan for the coming year.You have been informed that beginning inventory is 2,000 units,your plan should provide an ending inventory for the year equal to 500 units,and you have been provided the following forecasts of aggregate demand.What should be the planned rate of quarterly production?

• A) 6,500 units
• B) 6,000 units
• C) 5,625 units
• D) 5,375 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.