In general,as the order size increases
A)ordering costs decrease and carrying costs increase.
B)ordering costs increase and carrying costs decrease.
C)both ordering and carrying costs increase.
D)both ordering and carrying costs decrease.

Question

Quizplus · Accepted Answer

As the order size increases, there is a need for fewer orders to be placed. This leads to a decrease in ordering costs. At the same time, as the order size increases, there is a need for more inventory to be held. This leads to an increase in carrying costs. Therefore, the correct choice is A) ordering costs decrease and carrying costs increase.

In General,as the Order Size Increases