The Economic Order Quantity increases with demand and ordering costs and decreases with carrying costs.

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This is a fundamental principle of inventory management known as the EOQ model. The formula takes into account the tradeoff between the costs of holding inventory (carrying costs) and the costs of placing and receiving orders (ordering costs). As demand increases, the optimal order quantity also increases since more units will be needed to meet customer demand. As ordering costs increase, the optimal order quantity also increases because it becomes more expensive to place and receive orders. On the other hand, as carrying costs increase, the optimal order quantity decreases because it becomes more expensive to hold inventory.

The Economic Order Quantity Increases with Demand and Ordering Costs