A reduction in carrying costs would increase the economic order quantity.
By reducing the denominator in the EOQ formula, the quantity is increased.

Question

Quizplus · Accepted Answer

The EOQ formula is calculated as follows: EOQ = √[(2DS)/H], where D is the annual demand, S is the ordering cost per order, and H is the carrying cost per unit. By reducing the carrying cost per unit, the denominator in the formula is reduced, and therefore the quantity in the square root is increased. As a result, the economic order quantity is increased.

A Reduction in Carrying Costs Would Increase the Economic Order