Carter Company orders 250 units at a time,and places 15 orders per year.Total ordering cost is $1,600 and total carrying cost is $1,250.Which of the following statements is true?
A)the economic order quantity (EOQ)is 250
B)the economic order quantity (EOQ)is more than 250
C)the economic order quantity (EOQ)is less than 250
D)total inventory-related cost is lower than it would be at the economic order quantity (EOQ)
E)none of these

Question

Quizplus · Accepted Answer

The EOQ is more than 250 because the current ordering and carrying costs are not minimized, indicating that the current order quantity is not optimal. EOQ minimizes the total cost, which includes both ordering and carrying costs.

Carter Company Orders 250 Units at a Time,and Places 15