The General Chemical Company Uses 150,000 Gallons of Hydro Chloric

question 46

Multiple Choice

The General Chemical Company uses 150,000 gallons of hydro chloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. The chemical's economic order quantity is ________.

• A) 32,863 gallons
• B) 11,619 gallons
• C) 9,487 gallons
• D) 1,900 gallons

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Definitions:

Resource

Assets, materials, or valuable items that are available to be used to produce goods or services.

Derived Demand

The demand for a good or service resulting from the demand for another good or service, as seen in the demand for raw materials driven by the production of final goods.

Substitutes

Products or services that can satisfy the same need or desire, where an increase in the price of one leads to an increase in demand for the other.

Complements

Goods and services that are used together, where the consumption of one enhances the use or value of the other.