ECONOMICS

Detailed explanation-1: -EOQ will increase as the annual demand and the cost of ordering increase and it will decrease as the cost of carrying inventory and the unit cost increase.

Detailed explanation-2: -Which of the following statements concerning the basic EOQ model is true? If an actual order quantity is smaller than-the EOQ, the annual holding cost is less than the annual ordering cost. An increase in holding cost will increase the EOQ value.

Detailed explanation-3: -Run size exceeds maximum inventory is not true about the EOQ model. Explanation: EOQ model is also referred to as the production lot size or the non-instantaneous gradual model. In the economic order quantity model, the rate of consumption and replenishment is not the same.

Detailed explanation-4: -Carrying cost is the amount that a business spends on holding inventory over a period of time. It is the cost of owning, storing, and keeping the items in stock.