Willie Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?
A)increase
B)no change
C)decrease
D)substantial decrease

Question

Quizplus · Accepted Answer

Increasing the order quantities will result in an increase in the inventory carrying costs as more inventory would be held for longer periods. On the other hand, the ordering costs may decrease as the number of orders would decrease due to larger order quantities. However, the overall impact would be an increase in the total amount of annual carrying and ordering costs.

Willie Manufacturing Company Increased the Size of Several Inventory Order