Which of the following statements concerning the economic order quantity (EOQ) model is NOT TRUE when the unit holding cost increases?
A) The economic order quantity will decrease.
B) The number of orders per year will increase.
C) Annual ordering costs will increase.
D) Sunk costs will decrease.

Question

Quizplus · Accepted Answer

The economic order quantity will decrease because the higher holding cost makes it more expensive to hold inventory, so the optimal quantity to order will be smaller.

Which of the Following Statements Concerning the Economic Order Quantity