Which of the Following Statements Is True of the Economic-Order-Quantity

question 133

Multiple Choice

Which of the following statements is true of the economic-order-quantity decision model?

• A) It assumes purchasing costs are relevant because the cost per unit changes due to the quantity ordered.
• B) It assumes that quality costs are considered only to the extent that these costs affect ordering or carrying costs.
• C) It assumes that stockout costs are relevant even if no stockouts occur.
• D) It assumes that ordering costs and carrying costs are irrelevant.

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Definitions:

Manufacturing

The process of converting raw materials or components into finished goods using tools, human labor, machinery, and chemical processing.

Export Promotion

A government strategy aimed at encouraging local producers to sell their goods and services abroad.

Import Substitution

An economic policy that aims to replace foreign imports with domestic production, often through the use of tariffs, quotas, and other trade barriers.

Economic Growth

An increase in the production of goods and services in an economy over a period, typically measured by the rise in real GDP.