In the EOQ model,the carrying cost on inventory should include the required rate of an investment in inventory.

Question

Quizplus · Accepted Answer

The carrying cost on inventory should include the required rate of an investment in inventory as it is a cost associated with holding inventory such as storage, insurance, and handling expenses. It is calculated as a percentage of the cost of inventory held and represents the opportunity cost of investing capital in inventory instead of other investment opportunities.

In the EOQ Model,the Carrying Cost on Inventory Should Include