Question

What is the relationship between ordering cost and holding cost

Answer 1

Economic Order Quantity

Ordering a large quantity of goods, materials or supplies each month will decrease your order frequency and ordering cost, but the amount of stored inventory and your holding costs will increase.

Answer 2

Ordering cost refers to the cost of ordering one order of raw material on the other hand caring cost refers to the cost of managing and handling average inventory during the year .

Ordering a large quantity of goods materials or supplies each month will decrease our order frequency

But amount of the holding cost will increase our cost.

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