Author Question: Mia, a manager at Best Buy, increases the order size for a product that the company sells, which ... (Read 37 times)

rl · **on:** Jul 6, 2018

Mia, a manager at Best Buy, increases the order size for a product that the company sells, which will ________.

A) increase both ordering costs and carrying costs
B) increase ordering costs and decrease carrying costs
C) decrease both ordering costs and carrying costs
D) decrease ordering costs and increase carrying costs

Question 2

How does a fixed-point reordering system work?

A) When inventory level reaches 50 percent of maximum, the system orders new inventory.
B) When inventory level reaches 33 percent of maximum, the system orders new inventory.
C) At some preestablished inventory level, the system automatically orders new inventory.
D) At some random inventory level, the system automatically orders new inventory.

lucas dlamini · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

Answer: D
Explanation: A larger order size reduces ordering costs because over an extended period of time Mia will end up making fewer orders and thereby save individual costs associated with each order. However, at the same time, a larger order will increase carrying costs because it may result in needing to hold onto larger inventories and all the costs, such as storage, that go along with them.

Answer to Question 2

Answer: C
Explanation: A fixed-point reordering system uses cash register receipts to monitor inventory. When inventory reaches a certain predetermined level, new inventory is ordered to make sure that stocks do not get too low.