Multiple Choice
LAMA Creations creates sweaters using the wool of the Llama. The wool used in the manufacturing process is ordered by the bundle. LAMA requires 1,200 bundles of Llama wool per year and places orders of 100 bundles at a time. The cost of ordering is $80.00 per order and the carrying cost per bundle is $3.50. LAMA Creations can take advantage of a quantity discounts of $3.00 per bundle if they order in lots of 500 bundles or more. What is the opportunity cost of ordering at EOQ level.
A) $3,600.00
B) $1,500.00
C) $1,035.00
D) $500.00
Correct Answer:
Verified
Correct Answer:
Verified
Q13: LAMA Creations creates sweaters using the wool
Q14: The economic order quantity may be used
Q15: As discounts on inventory purchases are frequent
Q16: The economic order quantity is the order
Q17: LAMA Creations creates sweaters using the wool
Q19: Safety stock is:<br>A) extra quantity of goods
Q20: The cost of ordering is expressed as
Q21: Economic Order Quantity (EOQ) is calculated
Q22: Safety stock is an extra quantity of
Q23: As order quantity increases quantity discounts often