Based on the EOQ model,an appropriate strategy for managing inventory when there has been a dramatic increase in holding costs but ordering costs have been significantly reduced would be:
A)unchanged order quantities.
B)slightly decreased order quantities.
C)significantly decreased order quantities.
D)slightly increased order quantities.
E)significantly increased order quantities.

Question

Quizplus · Accepted Answer

With a significant increase in holding costs, it is beneficial to decrease order quantities to minimize the amount of inventory held at any given time. While ordering costs have been reduced, this savings should not necessarily be used to increase order quantities, as the goal is to minimize overall costs and holding costs have a greater impact on total inventory costs. Therefore, significantly decreasing order quantities is the most appropriate strategy.

Based on the EOQ Model,an Appropriate Strategy for Managing Inventory