Increases in the carrying cost and decreases in the ordering cost per purchase order result in ________.
A) smaller EOQ amounts
B) larger EOQ amounts
C) larger relevant total costs
D) smaller relevant total costs

Question

Quizplus · Accepted Answer

Increases in carrying cost make holding inventory more expensive, thus encouraging smaller order quantities to minimize these costs. Decreases in ordering cost reduce the penalty for placing orders, also allowing for smaller order quantities without significantly increasing total costs.

Increases in the Carrying Cost and Decreases in the Ordering