If a firm uses the EOQ model to manage its inventory and its managers decide to hold safety stock,its
A) reorder costs will fall.
B) processing costs will fall.
C) orders will be less frequent.
D) shortage costs will rise.
E) first order is increased to include the extra number of units sold.

Question

Quizplus · Accepted Answer

EOQ assumes inventor will hit 0 before re-ordering. Adding safety stock will increase the first order.

If a Firm Uses the EOQ Model to Manage Its