Discussion
In inventory control, which costs can vary with order quantity ?
Answer: D
The answer is all of the above.
In inventory models, the annual holding cost rises with the order quantity Q (average stock is about Q/2), and the annual ordering (reorder) cost falls with Q, since fewer orders are placed, about D/Q per year. The unit purchase cost can also depend on Q when suppliers offer quantity discounts for larger orders.
So each of the three costs can vary with the order quantity, and the options naming only one of them are incomplete.
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