In the quantity discount model, with carrying cost stated as a percentage of uni

Question

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must: A) Have the lowest total cost B) Have the largest quantity compared to other EOQ's C) Be to the left of the pricebreak quantity for that price, (For example, suppose that when the range of order quantity is from 10 to 20, the unit price is $1. Then, the left of the price break quantity is 10 units for the price. ) D) Be in a feasible range

Explanation / Answer

In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must be in a feasible range. The correct answer is option (D). The cost of production gives the rate of expenditure. It helps in performing the functions of increasing the demand and supply by an adeqaute manner.

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