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please explain why holding costs and ordering costs , the decrease or increase the EOQ would be under lower ?
by when EOQ would be increase ?
I am sorry but you are going to have to re-word your question.
At the moment is does not make any sense.Thank you for your patience reply & sorry sometimes the question will be meaningless , hope you do not mind.
can you please correct me :
1.) relationship for ordering costs and holding costs whether both rises or less the EOQ would under lower ? please explain why ?2.) why ordering costs increase / decrease the holding costs also increase / decrease ?
3.) if quantity stock order rises , the ordering cost falls because less order will be placed , because required items in stock?
4.) if quantity stock order less , the ordering costs rises because more orders will be placed due to stockouts are possible ?
Look at the formula 🙂
If the order cost increases then the top of the formula increases and so the EOQ increases.
If the holding cost increases, then the bottom of the formula increases and so the EOQ decreases. (Obviously the reverse happens if the costs decrease).The quantity ordered does not affect the ordering cost each time, but the total cost over the year will change – if the order quantity is higher then there will be fewer orders and so the total cost over the year will fall.
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