Which of the following is the set of all cost components that make up the fixed-order quantity total cost (TC)function?
A)Annual purchasing cost,annual ordering cost,fixed cost
B)Annual holding cost,annual ordering cost,unit cost
C)Annual holding cost,annual ordering cost,annual purchasing cost
D)Annual lead time cost,annual holding cost,annual purchasing cost
E)Annual unit cost,annual set up cost,annual purchasing cost

Question

Quizplus · Accepted Answer

The fixed-order quantity total cost function includes the annual holding cost and annual ordering cost, which are both variable costs, as well as the annual purchasing cost, which is a fixed cost. Therefore, the set of all cost components that make up the fixed-order quantity total cost function is annual holding cost, annual ordering cost, and annual purchasing cost. Choices A, D, and E include incorrect cost components or do not include all the necessary components.

Which of the Following Is the Set of All Cost