The overall goal for the buyer is to choose the order quantity that will minimize total annual cost,which is ______.
A)the sum of the yearly holding,ordering,and purchase costs
B)the sum of the yearly holding and ordering,less purchase costs
C)the sum of the yearly holding,ordering,and purchase costs less quantity discounts
D)the sum of the yearly holding,ordering,less quantity discounts

Question

Quizplus · Accepted Answer

The total annual cost includes all costs associated with holding inventory, placing orders, and purchasing the products. It is important to minimize this cost to improve profitability and efficiency. Option A is the correct choice as it includes all these costs. Option B is not correct as it does not include purchase costs, while option C accounts for quantity discounts and may not result in the minimum total cost. Option D is similar to option B and does not include purchase costs.

The Overall Goal for the Buyer Is to Choose the Order