Question

Question:- An increase in Economic Order Quantity will lead to

(A).Increase in Ordering cost (B).Reduction in inventory carrying cost (C).Reduction in ordering cost and increase in inventory carrying cost (D).Increase in ordering cost and reduction in inventory carrying cost

Please tell the correct option with explanation.

Answer 1

Answer:

Ordering a large amount of inventory increases a company's holding costs while ordering smaller amounts of inventory more frequently increases a company's setup costs. The economic order quantity model finds the quantity that minimizes both types of costs.