In ABC Printing, Queen's Black Is a Popular Input with an Annual

question 9

Multiple Choice

In ABC Printing, Queen's black is a popular input with an annual demand of 50,000 gallons.ordering cost of $50 per order, and the holding cost is $5 per unit per year; the economic order quantity is 1000.Hence during the year, they used 1000 as the order quantity.An audit of the costs revealed that the true ordering cost was only $25 and the true holding cost was $10 per gallon per year.The correct order quantity would have been 500.How much did ABC lose due to incorrect cost information during the year?

• A)0
• B)1250
• C)-1250
• D)500
• E)Cannot be found without additional information.

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Definitions:

Total Quality Management

A comprehensive management approach that focuses on continuous quality improvement of products and services by incorporating all members of an organization.

85/15 Rule

A principle suggesting that 85% of the success of an organization is due to system and process, while 15% is due to the work of individuals.

Collegial Model

An organizational framework based on shared decision-making and equal partnership among colleagues, typically found in educational and professional settings.

Human Relations Model

A theory in organizational management that emphasizes the importance of interpersonal relationships and the well-being of employees for achieving productivity and morale.