How Can Both the JIT and EOQ Inventory Theories Effectively

question 105

Multiple Choice

How can both the JIT and EOQ inventory theories effectively be reconciled?

• A) They can't. A firm must choose either one or the other.
• B) by using MRP
• C) by considering the setup cost as a variable instead of a parameter
• D) by applying Kanban cards to the EOQ system
• E) by assuming a finite production rate

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Definitions:

Cost of Goods Sold

The direct expenses tied to the production of goods sold by a company, including material and labor costs.

Net Income

A company's profit amount after all deductions for expenses and taxes from revenue have taken place.

FIFO Cost Flow

An inventory valuation method (First In, First Out) where goods first purchased or produced are sold or used first.

Income Tax Expense

The amount of money a company is obligated to pay in income taxes for a given fiscal period.