If the Actual Order Quantity Q Is Much Larger Than

question 8

Multiple Choice

If the actual order quantity Q is much larger than the Economic Order Quantity:

• A)The firm is paying high annual holding costs
• B)The firm is paying high annual ordering costs
• C)The firm is paying total costs that are equivalent to EOQ costs
• D)The firm should change its EOQ

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Definitions:

Simple Rate Of Return

A metric used to evaluate the gain or loss on an investment relative to the amount invested, expressed as a percentage.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity level to meet short-term obligations and operations.

Annual Net Operating Cash Inflows

The total amount of money that flows into a business from its operational activities, after all operational expenses have been paid, over a one-year period.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity of a business.