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EOQ

Ssayma10y ago
Hello sir why would both: ttl annual holding cost and EOQ be lower if the ordering cost decreases? Thank you for always helping out
John MoffatJohn MoffatTutor10y ago#1
If the order cost decreased, then the top part of the EOQ decreases and therefore the EOQ will decrease. If the EOQ is lower than the average inventory will be lower, and therefore the total annual holding cost will be lower.
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