{"id":50074,"date":"2024-04-15T23:05:04","date_gmt":"2024-04-15T23:05:04","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=50074"},"modified":"2024-04-15T23:05:04","modified_gmt":"2024-04-15T23:05:04","slug":"purchase-order-lead-time-is-multiplied-to-number-of-units-is-sold-per-unit-of-time-to-calculate","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/purchase-order-lead-time-is-multiplied-to-number-of-units-is-sold-per-unit-of-time-to-calculate\/","title":{"rendered":"Purchase order lead time is multiplied to number of units is sold per unit of time to calculate"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a97466088fc3\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    carrying costs                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    relevant total costs                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    economic order quantity                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"true\">\r\n                    reorder point                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>D. reorder point<\/strong><\/p>\n<p>The reorder point is the level of inventory at which a new order should be placed. It is calculated by multiplying the purchase order lead time by the number of units sold per unit of time. This ensures that there is always enough inventory on hand to meet demand while minimizing the costs of carrying inventory.<\/p>\n<p>Carrying costs are the costs associated with holding inventory, such as storage costs, insurance costs, and obsolescence costs. Relevant total costs are the sum of carrying costs and ordering costs. Economic order quantity (EOQ) is the order quantity that minimizes the total costs of ordering and carrying inventory.<\/p>\n<p>Here is a more detailed explanation of each option:<\/p>\n<ul>\n<li><strong>Carrying costs<\/strong> are the costs associated with holding inventory, such as storage costs, insurance costs, and obsolescence costs. Carrying costs are typically expressed as a percentage of the inventory value. For example, if the carrying cost is 10%, then the cost of holding \\$100 worth of inventory for one year would be \\$10.<\/li>\n<li><strong>Relevant total costs<\/strong> are the sum of carrying costs and ordering costs. Ordering costs are the costs associated with placing an order, such as the cost of the purchase order itself, the cost of shipping the goods, and the cost of receiving the goods. Ordering costs are typically expressed as a fixed cost per order. For example, if the ordering cost is \\$10 per order, then the cost of placing an order for 100 units would <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n         <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div>            <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> be \\$100.<\/li>\n<li><strong>Economic order quantity (EOQ)<\/strong> is the order quantity that minimizes the total costs of ordering and carrying inventory. The EOQ can be calculated using the following formula:<\/li>\n<\/ul>\n<p>$$EOQ = \\sqrt{\\frac{2DC}{\\lambda}}$$<\/p>\n<p>where:<\/p>\n<ul>\n<li>$D$ is the annual demand for the product<\/li>\n<li>$C$ is the cost of placing an order<\/li>\n<li>\n<p>$\\lambda$ is the annual holding cost per unit of inventory<\/p>\n<\/li>\n<li>\n<p><strong>Reorder point<\/strong> is the level of inventory at which a new order should be placed. It is calculated by multiplying the purchase order lead time by the number of units sold per unit of time. This ensures that there is always enough inventory on hand to meet demand while minimizing the costs of carrying inventory.<\/p>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Purchase order lead time is multiplied to number of units is sold per unit of time to calculate<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/purchase-order-lead-time-is-multiplied-to-number-of-units-is-sold-per-unit-of-time-to-calculate\/\" 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