Which factor is considered in Total Annual Setup Costs (TASC)?

Total Annual Setup Costs (TASC) focuses on the costs associated with preparing and placing orders over a period of time. The key elements included in this calculation are order frequency and order size, which directly impact the number of setups required in a given period and the cost associated with each setup.

Order frequency relates to how often orders are placed throughout the year, while order size refers to the quantity ordered each time. These two factors are critical because they help determine the intensity of the resources needed for setups, such as labor and materials. For example, ordering in larger quantities less frequently might reduce total setup costs despite increasing holding costs, while smaller, more frequent orders might increase setup costs but decrease holding costs.

In contrast, holding costs, variable costs, and supplier negotiations play roles in other cost calculations, but they do not directly pertain to TASC. Holding costs relate to storing inventory, variable costs can apply to production or procurement, and supplier negotiations can influence the pricing of goods but do not directly affect the setup process itself. Overall, considering order frequency and order size allows businesses to assess and optimize their setup operations effectively, which is why this is the correct factor for TASC.