Asked by Devyn Smallwood on Jul 07, 2024
Verified
Which statement is most accurate when deciding how much and when to buy?
A) Balance price,volume,carrying cost,and the cost of stock-outs.
B) Use the forecast future demand,lead times,and prices to determine optimal order volume.
C) Determine the price premium to attain the desired order quantity.
D) Managers seldom make purchase decisions until they are absolutely sure of the volume required.
E) The costs of placing orders and holding inventory are so low they do not significantly affect the decision of how much to buy.
Stock-Outs
Instances when items are no longer available in inventory, leading to inability to fulfill demand.
Carrying Cost
Expenses associated with holding inventory, including storage, insurance, taxes, and the cost of capital tied up in inventory.
Optimal Order
The most efficient and cost-effective quantity of an item to order, considering factors such as demand, storage costs, and order costs.
- Understand how to balance various costs to decide on the optimal purchase quantity and timing.
Verified Answer
Learning Objectives
- Understand how to balance various costs to decide on the optimal purchase quantity and timing.
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