Which Statement Concerning the Economic Order Quantity (EOQ)model Is Not

question 10

Multiple Choice

Which statement concerning the economic order quantity (EOQ) model is not correct?

• A)The lower the level of inventory held, the greater the number of orders required.
• B)A decrease in the number of orders increases the overall cost of ordering inventory.
• C)The more inventory that is held the higher the cost of holding inventory.
• D)None of the above, i.e., all are correct statements.

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Definitions:

Retained Earnings

Retained earnings are the portion of a company's profits that is kept or retained and not paid out as dividends to shareholders but reinvested in its core business or to pay debt.

Shareholders'

Individuals or entities that own one or more shares of stock in a public or private corporation, granting them certain rights such as voting on corporate matters.

Reinvested Profit

Earnings that a company plows back into itself to fund growth, debt repayment, or asset purchases rather than distributing to shareholders as dividends.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, providing insight into its profitability.