Asked by
Maggie Erpelding
on Oct 31, 2024
Verified
Which of the following statements about quantity discounts is false?
A) The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs.
B) In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available.
C) If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule.
D) The larger the annual demand, the less attractive a discount schedule will be.
E) The smaller the ordering cost, the less attractive a discount schedule will be.
Quantity Discounts
Price reductions given to customers for purchasing large volumes of a product, aimed at encouraging bulk buying and increasing sales volume.
Cost-Minimizing Solution
A cost-minimizing solution is an economic strategy or method that aims to achieve the lowest possible cost while fulfilling certain conditions or requirements.
Annual Holding Costs
The total cost associated with storing and maintaining inventory over a year, including warehousing, insurance, and depreciation.
- Understand the concept of quantity discounts and their impact on inventory decisions.
Verified Answer
HT
Learning Objectives
- Understand the concept of quantity discounts and their impact on inventory decisions.