In the Quantity Discount Model, with Carrying Cost Stated as a Percentage

question 89

Multiple Choice

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must

• A)have the lowest total cost.
• B)be in a feasible range.
• C)be to the left of the price break quantity for that price.
• D)have the largest quantity compared to other EOQs.
• E)have smaller ordering costs than the others.

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Definitions:

Philip Crosby

An influential quality management expert best known for his philosophy that organizations should aim for "zero defects" to improve quality.

Quality Loss Function (QLF)

A mathematical function that identifies all costs connected with poor quality and shows how these costs increase as product quality moves from what the customer wants.

Costs of Quality

The expenses associated with preventing, detecting, and correcting defective work, categorised into prevention costs, appraisal costs, and failure costs.

ISO 14000

A series of environmental management standards established by the International Organization for Standardization (ISO).