Economies of Scale in Purchasing and Ordering Motivate a Manager

question 31

Multiple Choice

Economies of scale in purchasing and ordering motivate a manager to

• A)increase the lot size and cycle inventory.
• B)decrease the lot size and cycle inventory.
• C)eliminate inventory.
• D)increase the lot size and reduce cycle inventory.

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Definitions:

Earnings Before Interest and Taxes

An indicator of a company's profitability, calculated as revenue minus expenses excluding tax and interest.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage, calculated by dividing total liabilities by total assets.

Capital Structure

The mixture of debt and equity that a company uses to finance its operations and growth.

ROE

Return on Equity; a financial ratio that measures the profitability of a firm by dividing net income by shareholder's equity.