In the EOQ model,if quantity discounts are offered,buying a larger quantity just because of the lower per-unit purchase price ______.
A)might not result in the minimum total annual cost because the holding costs are likely to increase
B)will result in the minimum total annual cost
C)might not result in the minimum total annual cost because the ordering costs are likely to increase
D)will result in the highest total annual cost

Question

Quizplus · Accepted Answer

Buying a larger quantity just because of the lower per-unit purchase price might not result in the minimum total annual cost because the holding costs are likely to increase. Therefore, it is important to calculate the optimal order quantity including quantity discounts to ensure the minimum total annual cost.

In the EOQ Model,if Quantity Discounts Are Offered,buying a Larger