If Your Company Had an Annual Purchase Cost of Items

question 30

Multiple Choice

If your company had an annual purchase cost of items equal to $2,000,000,an annual holding cost of $150,000 and an annual ordering cost of $750,000 this scenario would reveal that:

• A)Your fixed lot size was lower than the EOQ
• B)Your fixed lot size was equal to the EOQ
• C)Your fixed lot size was higher than the EOQ
• D)Nothing because there is insufficient information to discern where the EOQ would be.

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Definitions:

Profit-Maximizing

A financial strategy or decision-making process aimed at achieving the highest possible profit from business operations.

Damages

Monetary compensation required to be paid by an individual or organization to another for loss or injury.

Entry Restrictions

Regulations or requirements that limit or control the access of new competitors into a market or industry.

Revenue Function

A mathematical relation that calculates the total revenue generated by selling goods or services, typically as a function of price or quantity.