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. Which of the following is the set of all cost components that make up the...

. Which of the following is the set of all cost components that make up the fixed-order quantity total annual cost (TC) function?

A. Annual lead time cost, annual holding cost, annual purchase cost
B. Annual holding cost, annual ordering cost, annual purchase cost
C. Annual holding cost, annual ordering cost, unit cost
D. Annual unit cost, annual set up cost, annual purchase cost

E. None of the above

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Answer #1

Answer : B. Annual holding cost, annual ordering cost, annual purchase cost

Note : These costs are used to monitor the level of inventories as well as review inventory system, annual holding cost helps to understand the overall cost associated with inventory storage, annual ordering cost helps to know the orders placed and cost of those orders while annual purchasing cost provides the cost associated with the purchase of raw material, supply chain etc.

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