Which of the following statements is true with regard to the order quantity?
A)If the order quantity in each order is large,then fewer orders will be placed,which will result in lower annual holding costs and annual ordering costs.
B)If the order quantity in each order is small,then more orders will be placed,which will result in lower annual holding costs but higher annual ordering costs.
C)If the order quantity in each order is large,then fewer orders will be placed,which will result in higher annual ordering costs and annual holding costs.
D)If the order quantity in each order is small,the fewer orders will be placed,which will result in lower annual ordering costs but higher holding costs.

Question

Quizplus · Accepted Answer

If the order quantity in each order is small, more orders will be placed, resulting in lower holding costs as less inventory will be held in stock, but higher ordering costs as there will be more orders placed. Option A and C are incorrect as they contradict this principle. Option D is incorrect as it states that fewer orders will be placed with small order quantities, which is not true.

Which of the Following Statements Is True with Regard to the Order