If Annual Demand Increases by 100%, the Average Inventory Held

question 75

Multiple Choice

If annual demand increases by 100%, the average inventory held in a system governed by the EOQ model is:

• A)increased 100%.
• B)decreased by 100%.
• C)decreased by 50%.
• D)increased by 40%.

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Definitions:

Ultramares Rule

The Ultramares rule is a legal doctrine relating to negligence, limiting the liability of auditors to third parties for financial report errors, except in cases of fraud or gross negligence.

Accountant Liability

Refers to the legal obligation of accountants to perform their duties in accordance with laws and professional standards, under which failure can result in legal or professional penalties.

Privity Rule

A legal principle stating that contracts cannot confer rights or impose obligations upon any person who is not a party to the contract.

Gross Negligent Fraud

Extreme carelessness or reckless disregard for the truth or for the rights of others, often involving fraudulent intentions or outcomes.