The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order $550 Relevant carrying costs per year for each package: Required annual return on investment Required other costs per year 17% $7 Annual demand is 30,000 packages per year. The purchase price per package is $53. Which of the following statements is true of Allianz's EOQ system costs? O At EOQ, the annual relevant ordering costs is exactly the half of annual relevant carrying costs. At EOQ, the annual relevant carrying costs is exactly the half of the annual relevant total costs. O At EOQ, the annual relevant carrying costs is higher than the annual relevant ordering costs. O At EOQ, the annual relevant carrying costs is equal to the annual relevant total costs.

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order $550 Relevant carrying costs per year for each package: Required annual return on investment Required other costs per year 17% $7 Annual demand is 30,000 packages per year. The purchase price per package is $53. Which of the following statements is true of Allianz's EOQ system costs? O At EOQ, the annual relevant ordering costs is exactly the half of annual relevant carrying costs. At EOQ, the annual relevant carrying costs is exactly the half of the annual relevant total costs. O At EOQ, the annual relevant carrying costs is higher than the annual relevant ordering costs. O At EOQ, the annual relevant carrying costs is equal to the annual relevant total costs.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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