The binary variables in the fixed cost models correspond to:
A) the number of units or products produced
B) the total profit
C) the amount of labor hours
D) a process for which a fixed cost occurs

Question

The binary variables in the fixed cost models correspond to:
A) the number of units or products produced 
B) the total profit 
C) the amount of labor hours 
D) a process for which a fixed cost occurs

Quizplus · Accepted Answer

Binary variables in fixed cost models correspond to processes or activities for which a fixed cost occurs, such as whether to purchase or not purchase a piece of equipment, whether to outsource or not outsource a process, or whether to perform maintenance or not perform maintenance. They are not related to the number of units or products produced, total profit, or amount of labor hours.

The Binary Variables in the Fixed Cost Models Correspond To