The economic order quantity for inventory is higher for an organization that has:
The economic order quantity for inventory is higher for an organization that has:
The Economic Order Quantity (EOQ) formula is designed to minimize the total inventory costs, which comprise ordering costs and carrying costs. If the fixed inventory ordering costs are higher, it makes sense for the organization to order larger quantities to spread out these fixed costs over a larger number of units, thereby reducing the per-unit cost of ordering. This means the EOQ will be higher for organizations with higher fixed inventory ordering costs.
it's economical to buy more if the ordering cost is high. imagine situations where delivery fixed cost very high.
It is about the economic order quantity and not the economy to be realized. If the inventory order is fixed (not reduced) and the cost is higher, then the numerator of the EOQ ratio increases.
So why is not D