In the simple EOQ model annual inventory carrying costs and annual ordering costs vary:
A) according to the time of year
B) with seasonally adjusted demand
C) with the order quantity
D) do not vary in any way
E) in an unknown manner

Question

Quizplus · Accepted Answer

Annual inventory carrying costs and annual ordering costs vary with the order quantity in the simple EOQ model. This is because as the order quantity increases, the average inventory level and therefore the carrying costs increase, while the number of orders and therefore the ordering costs decrease.

In the Simple EOQ Model Annual Inventory Carrying Costs and Annual