Which of the Following Equations Determines the Total Annual Carrying

question 50

Multiple Choice

Which of the following equations determines the total annual carrying costs when no safety stock is kept?

• A)Cost of placing an order * Order quantity
• B)Cost of placing an order * Number of orders per year
• C)Cost of placing an order * One-half of the order quantity
• D)Unit carrying costs per year * One-half of the order quantity

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the amount of the good that consumers are willing to purchase at that price, ceteris paribus.

Zero Price

Refers to a situation where a good or service is offered without requiring payment; often to promote sharing or distribution efficiency.

Marginal Utility

The supplementary satisfaction or advantage a consumer experiences by using one more unit of a good or service.

Diminishing

Refers to the principle where additional units of input result in progressively smaller increases in output, often applied in the context of diminishing marginal returns in production.