Assume That Annual Demand for a Part Is 15,000 Units,the

question 31

Multiple Choice

Assume that annual demand for a part is 15,000 units,the ordering cost is $20 per order and the annual holding cost of carrying inventory in stock is 50% of the cost of the unit.A quantity discount will reduce the unit price from $5.00 for an order placed between 0 to 1,499 units to $4.95 for an order of the size of 1,500 units or more.Using a price-break inventory model,which of the following is the optimal order quantity?

• A)357 units
• B)490 units
• C)1,500 units
• D)1,992 units
• E)None of the above

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Definitions:

Fechner's Law

A principle in psychophysics stating that the perceived intensity of a stimulus changes proportionally to the logarithm of the actual stimulus intensity.

Thorndike's Law

A principle stating that behaviors followed by positive outcomes are more likely to be repeated, whereas behaviors followed by negative outcomes are less likely to be repeated.

Ames Room

An optical illusion room designed to manipulate perceived size and perspective, where objects appear larger or smaller than they really are.

Proximal Stimulus

The physical energy from an object that directly interacts with sensory receptors, leading to perception.