Scenario 9.4 Consider the Following Data for an Independent-Demand Item Maintained by Maintained

question 189

Multiple Choice

Scenario 9.4
Consider the following data for an independent-demand item maintained by Vicki Crittenden,the proprietor of a local auto repair shop:
Weekly demand = 50 units
Ordering cost = $8/order
Holding cost = $4/unit/year
Weeks in a year = 50
-Use the information in Scenario 9.4.Due to new ordering procedures initiated by Crittenden,the ordering cost is dropping to $4 per order.At the same time,the weekly demand increases to 64 units per week due to an increase in business.What effect do these changes have on the EOQ quantity for this item?

• A)The EOQ quantity remains unchanged.
• B)The EOQ quantity increases by 20%.
• C)The EOQ quantity decreases by 20%.
• D)Sufficient information is not available for answering this question.

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Definitions:

U.S. Consumption

This term refers to the total value of all goods and services consumed within the United States over a specific time period.

Government Purchases

Expenditures by the government on goods and services that directly consume resources or are used in the production of public services.

GDP

Stands for Gross Domestic Product, which is the total value of all goods and services produced within a country's borders in a specific time period and a key indicator of economic health.

Net Exports

The financial difference between what a country sells abroad and what it buys from other countries, representing its trade balance.