Which statement concerning the economic order quantity (EOQ)model is not correct?
A)The lower the level of inventory held, the greater the number of orders required.
B)A decrease in the number of orders increases the overall cost of ordering inventory.
C)The more inventory that is held the higher the cost of holding inventory.
D)None of the above, i.e., all are correct statements.

Question

Quizplus · Accepted Answer

A decrease in the number of orders actually decreases the overall cost of ordering inventory as there are fewer ordering costs incurred. The EOQ model tries to find the optimal balance between the ordering cost and the holding cost to minimize the total inventory cost. Therefore, statement B is not correct. A, C, and D are correct statements.

Which Statement Concerning the Economic Order Quantity (EOQ)model Is Not