Jones Company has calculated that the EOQ for a particular item is 1,000 units.However,Jones does not have enough capital to order that many units each time,so it only orders 250 units at a time.This will result in:
A)Higher annual inventory carrying cost than ordering the EOQ quantity
B)Lower annual inventory carrying cost than ordering the EOQ quantity
C)Lower annual ordering cost than ordering the EOQ quantity
D)Cannot be determined

Question

Quizplus · Accepted Answer

Ordering less than the EOQ results in more frequent orders, which increases the ordering costs but decreases the average inventory level, thus reducing the annual inventory carrying costs.

Jones Company Has Calculated That the EOQ for a Particular