When facing quantity discounts, the EOQ found with the lowest price level is always the lowest total cost plan.

Question

Quizplus · Accepted Answer

The EOQ (Economic Order Quantity) that results in the lowest total cost may not always be the one found at the lowest price level. This is because the total cost includes not just the cost of the goods, but also the ordering costs and holding costs. A lower price per unit might lead to larger order quantities that increase holding costs, offsetting the benefit of the lower price. The optimal EOQ balances these costs to achieve the lowest total cost, which might not be at the lowest price level once all factors are considered.

When Facing Quantity Discounts, the EOQ Found with the Lowest