Business, 20.08.2021 02:50 rayisaiah3

Suppose a firm currently orders in batches of 2000 units every month. The ordering costs are $400/order. The supplier sells the units to the firm at unit price of $20/unit. In addition, the cost of capital is 15% per annum. Which of the following statements is true? A) The current order quantity minimizes the total cost associated with inventory holding and ordering costs.
B) Annual inventory holding costs are higher that annual ordering costs.
C) If the firm increases its order quantity from the current level, its ordering costs will increase.
D) Annual ordering costs are higher than annual inventory holding costs.
E) None of the above.

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Suppose a firm currently orders in batches of 2000 units every month. The ordering costs are $400/or...

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