Annual ordering cost is inversely related to order size,as the size of orders decreases the annual cost of ordering increases.

Question

Quizplus · Accepted Answer

This statement is true according to the economic order quantity model, which considers the trade-off between the annual ordering cost and the annual holding (or carrying) cost. As the size of orders decreases, the annual ordering cost increases because there are more orders to place, process, and manage. Conversely, as the size of orders increases, the annual ordering cost decreases because there are fewer orders to place, process, and manage.

Annual Ordering Cost Is Inversely Related to Order Size,as the Size