If the actual order quantity Q is much larger than the Economic Order Quantity:

Question

Quizplus · Accepted Answer

If the actual order quantity is much larger than the Economic Order Quantity, the firm is ordering more than necessary and therefore holding excessive inventory. This results in high annual holding costs, as the firm must pay for additional storage space, insurance, and handling costs. The firm may benefit from adjusting their reorder point or changing their EOQ to better align with their actual demand and reduce excess inventory.

If the Actual Order Quantity Q Is Much Larger Than