Answer the Following Questions Using the Information Below:
the Allianz

question 35

Multiple Choice

Answer the following questions using the information below:
The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
$\begin{array} { l } \text {Relevant ordering costs per purchase order }&\$450 \\ \text {Relevant carrying costs per year for each package: }& \\ \text { Required annual return on investment}& 15\%\\ \text {Required other costs per wear }& \$4\\\end{array}$
Annual demand is 30,000 packages per year. The purchase price per package is $48.
-What is the economic order quantity?

• A) 1,936.50 units
• B) 1,414.21 units
• C) 1,552.65 units
• D) 2,598.07 units

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Definitions:

Optimal Quantity

The quantity of a good or service that maximizes efficiency or utility, often where marginal cost meets marginal benefit.

Sweatshirt Production

The process of creating sweatshirts, involving the selection of materials, design, and manufacturing.

MB < MC

This indicates a scenario where the marginal benefit of producing or consuming one more unit of a good is less than the marginal cost of producing that additional unit.

Decision Maker

An individual or entity responsible for making choices that will impact outcomes in a business or personal context.