Under Which Scenario Does the Economic Order Quantity Inventory Management

question 11

Multiple Choice

Under which scenario does the economic order quantity inventory management model work poorly?

• A)A clothing retailer wants to reduce its inventory shortage costs without unnecessary increases in carrying costs.
• B)A grocery store wants to optimize its fruit and vegetable produce inventory, which has an 8% spoilage rate per week.
• C)A store that sells only Christmas decorations and Halloween costumes wants to optimize its inventory management.
• D)An online retailer wants to determine optimal inventory levels.

---

Definitions:

Depreciation Expense

The allocated cost of an asset over its useful life, used to account for declines in value due to use and wear and tear.

Salvage Value

Salvage value is the estimated residual value of an asset at the end of its useful life, reflecting what the asset can be sold for once it is no longer needed.

Accelerated Depreciation

A method of depreciation that allows for higher depreciation expenses in the initial years of an asset's life and lower charges later on.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.