ECONOMICS

Detailed explanation-1: -So as order sizes increase, purchasing costs go down. However, larger orders increase inventory levels. And as inventory increases, carrying costs go up. So the two costs move inversely to one another.

Detailed explanation-2: -ordering costs decrease and carrying cost increase. For a given firm, the ordering cost per order is usually fixed cost which does not change with the size of order. Hence the total ordering cost reduces as the order size increases because less number of orders are required to be placed in such scenario.

Detailed explanation-3: -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-4: -Ordering Cost is dependant and varies based on two factors-The cost of ordering excess and the Cost of ordering too less. Both these factors move in opposite directions to each other. Ordering excess quantity will result in carrying cost of inventory.