The economic order quantity for inventory is higher for an organization that has:
A) Lower annual unit sales.
B) Higher fixed inventory ordering costs.
C) Higher annual carrying costs as a percentage of inventory value.
D) A higher purchase price per unit of inventory.

Question

Quizplus · Accepted Answer

Higher fixed inventory ordering costs increase the economic order quantity because it becomes more cost-effective to order larger quantities less frequently to minimize the total ordering costs.

The Economic Order Quantity for Inventory Is Higher for an Organization