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:

High-margin Items

Products or services that generate a significantly higher percentage of profit relative to their sales price.

Incremental Analysis

An analytical approach that focuses only on those costs and revenues that change as a result of a decision.

Break-even Point

The point at which total revenues equal total costs, resulting in no net loss or gain for the business.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance, providing stability to a company's expense structure.