The suppler for Omega Corporation has offered the company a 5 percent discount if it will order more units less frequently.If Omega accepts the supplier's offer,the cost of carrying inventory will ________ and the cost of running out of inventory will ________.
A)rise;stay the same
B)fall;fall
C)rise;fall
D)fall;stay the same

Question

Quizplus · Accepted Answer

Ordering more units less frequently will result in a higher inventory level, which will increase the cost of carrying inventory. However, the 5 percent discount will reduce the unit cost, which will decrease the cost of running out of inventory. Overall, the cost of carrying inventory will rise and the cost of running out of inventory will fall.

The Suppler for Omega Corporation Has Offered the Company a 5