If demand or annual usage increases by 20%,then the relevant economic order quantity will decrease.

Question

Quizplus · Accepted Answer

The economic order quantity formula takes into account the holding costs and ordering costs, but it does not factor in changes in demand or usage. Therefore, a change in demand or usage will not affect the economic order quantity unless it leads to a change in the holding costs, ordering costs, or other relevant factors. In general, an increase in demand or usage will lead to an increase in the economic order quantity, as firms try to minimize their total inventory costs by ordering larger quantities less frequently.

If Demand or Annual Usage Increases by 20%,then the Relevant