What Is the Primary Purpose of the Basic Economic Order

question 119

Multiple Choice

What is the primary purpose of the basic economic order quantity model shown below? Q* =

• A)to calculate the reorder point,so that replenishments take place at the proper time
• B)to minimize the sum of carrying cost and holding cost
• C)to maximize the customer service level
• D)to minimize the sum of setup cost and holding cost
• E)to calculate the optimum safety stock

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Definitions:

Performance Report

A document that compares actual operational or financial results to planned or budgeted results.

Cost Center

A department or unit within an organization that does not directly add to profit but still incurs costs.

Departmental Contribution To Overhead

The amount of money that each department contributes towards covering the company's indirect costs or overheads.

Profit Center

A segment or division within a company that is responsible for generating its own revenue and profit, tracked separately for performance analysis.