Due to unprecedented growth during the year Denise's Flowers decided to use some of its surplus cash to increase the size of several inventory order quantities that had been previously determined using an EOQ model.
Required:
For each of the following items tell whether the increase in order size caused an increase, a decrease, or no change.
-total annual carrying costs

Question

Quizplus · Accepted Answer

Increasing the order size beyond the Economic Order Quantity (EOQ) leads to higher inventory levels on average, which in turn increases the total annual carrying costs because carrying costs are typically a function of the average inventory level.

Due to Unprecedented Growth During the Year Denise's Flowers Decided