The economic ordering quantity will rise due to an increase in which of the following variable(s)?
A) product demand (sales).
B) ordering costs
C) both a and b
D) neither a nor b

Question

Quizplus · Accepted Answer

The economic ordering quantity (EOQ) is the optimal quantity of inventory to order at a time to minimize the total inventory costs. The EOQ is determined by the following formula:```EOQ = √(2*D*O)/H```where:* D is the annual demand for the product* O is the ordering cost per order* H is the holding cost per unit of inventory per yearAs you can see from the formula, the EOQ is directly proportional to the annual demand for the product (D) and the ordering cost per order (O). This means that an increase in either of these variables will result in an increase in the EOQ.

The Economic Ordering Quantity Will Rise Due to an Increase