A Firm Has the Following Gross Requirements for Item F

question 62

Multiple Choice

A firm has the following gross requirements for Item F.If ordering costs are $60 per order and carrying costs are $0.50 per period.

If the periodic order quantity lot sizing rule is used,then planned order releases in Period 2 would be

• A)40 in period 1
• B)60 in period 2
• C)120 in period 3
• D)140 in Period 2

---

Definitions:

Cycle Inventory

The inventory a company needs to meet its average sales demand between the arrival of stock replenishments.

Total Cost

The complete cost of production or providing a service, including fixed and variable costs.

Cycle Inventory

The average inventory a business maintains to satisfy its normal demand during a production or purchasing cycle.

Economies of Scale

Cost advantages obtained by businesses when production becomes efficient, leading to lower per-unit costs.