Which of the following statements about quantity discounts is False? A) The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. B) In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. C) If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. D) The larger annual demand, the less attractive a discount schedule will be. E) The smaller the ordering cost, the less attractive a discount schedule will be.

Question

Quizplus · Accepted Answer

The statement that the larger annual demand, the less attractive a discount schedule will be, is false. In reality, a larger annual demand can make quantity discounts more attractive because the savings on the unit cost, when multiplied over a larger volume, can significantly outweigh the additional holding costs incurred by buying in larger quantities.

Which of the Following Statements About Quantity Discounts Is False