The Possibility of a Conflict Between the Order Quantity That

question 151

Multiple Choice

The possibility of a conflict between the order quantity that an EOQ model recommends and the order quantity that the purchasing manager regards as optimal is increased with

• A)inventory costs which are computed with the FIFO method.
• B)lower priced inventory items.
• C)the absence of opportunity costs not being recorded in conventional accounting systems.
• D)competitive quotes from suppliers.
• E)lower priced costs of goods sold.

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Definitions:

Decision Tree Analysis

A graphical representation of possible solutions to a decision based on different conditions, often used in business to strategize investments or processes.

NPV

Net Present Value (NPV) is a financial metric that calculates the present value of all future cash flows associated with an investment, minus the initial investment cost.

Risk

Exposure to the chance of loss or damage, often evaluated in financial terms for its potential impact on investment returns.

Sensitivity Analysis

A technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions.