Mia, a manager at Best Buy, increases the order size for a product that the company sells, which will ________.
A) increase both ordering costs carrying costs
B) increase ordering costs and decrease carrying costs
C) decrease both ordering costs carrying costs
D) decrease ordering costs and increase carrying costs

Question

Quizplus · Accepted Answer

D) A larger order size reduces ordering costs because over an extended period of time Mia will end up making fewer orders and thereby save individual costs associated with each order. However, at the same time, a larger order will increase carrying costs because it may result in needing to hold onto larger inventories and all the costs, such as storage, that go along with them.

Mia, a Manager at Best Buy, Increases the Order Size