If the Costs (S and H) and Demands (D) Are

question 9

Multiple Choice

If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?

• A) The EPQ model produces a lower total annual cost.
• B) The maximum inventory level is lower under the EPQ model than under the EOQ model.
• C) The two models use different formulas to compute annual ordering cost.
• D) The inventory depletion rate is the same for both models.
• E) The two models use different formulas to compute annual holding cost.

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Definitions:

Capital Gains

The profit realized from the sale of a capital asset, like stocks or real estate, when the sale price exceeds the purchase price.

Interest Income

Earnings received from deposit or investment accounts, such as savings accounts, bonds, or loans.

Taxable Income

Income on which tax must be paid; total income minus exemptions and deductions.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), expressing the percentage of income that goes to taxes.