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Lynna [10]
3 years ago
6

Daniel Trumpe has computed the EOQ for a product he sells to be 400 units. However, due to recent events he has a cash flow prob

lem. Therefore, he orders only 100 units each time he places an order. Which of the following is true for this situation?
A. Annual ordering cost will be lower than annual holding cost.
B. Annual ordering cost will be higher than annual holding cost.
C. Annual ordering cost will equal annual holding cost.
D. Annual ordering cost will be unaffected by the order policy change.
E. Nothing can be determined without more information.
Mathematics
1 answer:
My name is Ann [436]3 years ago
3 0

Answer:

The answer is: A) Annual ordering cost will be lower than annual holding cost.

Step-by-step explanation:

The economic order quantity (EOQ) refers to the optimum quantity a business should buy of a product in or to minimize ordering and holding costs. The formula for calculating EOQ is:

√[(2 x annual demand in units x ordering costs)÷ annual holding cost per unit]

If EOQ is 400, but Daniel can only buy 100 units, then the divisor will be larger. In this case the divisor is the annual holding cost per unit.

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Answer:

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The likelihood of an event is known as probability. The probability of an event \displaystyle pp is a number that always satisfies \displaystyle 0\le p\le 10≤p≤1, where 0 indicates an impossible event and 1 indicates a certain event. A probability model is a mathematical description of an experiment listing all possible outcomes and their associated probabilities. For instance, if there is a 1% chance of winning a raffle and a 99% chance of losing the raffle, a probability model would look much like the table below.

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The sum of the probabilities listed in a probability model must equal 1, or 100%.

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Step-by-step explanation:

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