An operations strategy which recognizes lowering carrying costs and increasing o

Question

An operations strategy which recognizes lowering carrying costs and increasing ordering costs will result in:

unchanged order quantities.

first decreased, then slight increased order quantities.

greatly increased order quantities.  

slightly decreased order quantities.

greatly decreased order quantities.

unchanged order quantities.

first decreased, then slight increased order quantities.

greatly increased order quantities.  

slightly decreased order quantities.

greatly decreased order quantities.

Explanation / Answer

When carrying costs such as inventory costs are lowered and ordering costs are increased , there will be a decrease in the total minimum cost required which is order quantity . Hence there will be a great decrease in order quantities. Hence the answer is E.

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