The Economic Production Quantity Is 500 Units (Units Are Delivered

The economic production quantity is 500 units (units are delivered to the user department as they come off the production line) . If the firm decides to buy this item from an outside supplier rather than producing it, the economic purchase quantity would probably be (assume that inventory costs of production and purchasing an item are the same) :

A) less than 500 units.
B) more than 500 units.
C) 500 units.
D) The direction of change in quantity cannot be determined without additional information.

Correct Answer:

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