Which of the Following Statements About the Basic EOQ Model

question 63

Multiple Choice

Which of the following statements about the basic EOQ model is TRUE?

• A)If the ordering cost were to double,the EOQ would rise.
• B)If annual demand were to double,the EOQ would increase.
• C)If the carrying cost were to increase,the EOQ would fall.
• D)If annual demand were to double,the number of orders per year would increase.
• E)All of the above statements are true.

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Definitions:

Obsolescence

The process of an asset becoming outdated or no longer used, often due to technological advancements.

Annual Rate of Return

The Annual Rate of Return is the percentage of profit or loss on an investment over a one-year period, taking into consideration both capital gains and dividends.

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a business venture.

Net Annual Cash Inflow

The difference between all cash received and all cash expended by a business in one year.