Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.

Question

Quizplus · Accepted Answer

Carrying cost is the cost associated with holding inventory, such as storage, insurance, interest, and other expenses. It is generally calculated as a percentage of the inventory value. Since larger orders require more storage space and incur higher interest and insurance expenses, the carrying cost tends to increase as the order size grows. Therefore, the statement is true.

Carrying Cost Is a Function of Order Size; the Larger