EOQ

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June 9, 2016 at 9:32 pm #321766
sxhawty
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A company uses the Economic Order Quantity (EOQ) model and holds no buffer inventory. Its annual cost of holding one unit in inventory has decreased.
EOQ – increase? decrease? or no effect?
Total Annual cost of placing orders? – increase? decrease? or no effect?
June 10, 2016 at 6:16 am #321825
John Moffat
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Look at the formula, and put some figures in if it helps/
If holding cost decreases then EOQ increases.
If EOQ increases then fewer orders are needed so annual cost of placing orders decreases.
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