A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar

Question

A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar Chen has just joined as the Director of Finance and has passed an order which says that one month%u2019s supply should be purchased at a time. Which of the following is correct assuming all other variables remain unchanged? Answer The annual cost of carrying inventories will increase. The annual cost of carrying inventories will decrease. The annual cost of carrying inventories will not change. Annual ordering cost will increase
None of the above A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar Chen has just joined as the Director of Finance and has passed an order which says that one month%u2019s supply should be purchased at a time. Which of the following is correct assuming all other variables remain unchanged? A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar Chen has just joined as the Director of Finance and has passed an order which says that one month%u2019s supply should be purchased at a time. Which of the following is correct assuming all other variables remain unchanged? A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar Chen has just joined as the Director of Finance and has passed an order which says that one month%u2019s supply should be purchased at a time. Which of the following is correct assuming all other variables remain unchanged? A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar Chen has just joined as the Director of Finance and has passed an order which says that one month%u2019s supply should be purchased at a time. Which of the following is correct assuming all other variables remain unchanged? A company places purchase orders to buy two weeks%u2019 supply at a time. Oscar Chen has just joined as the Director of Finance and has passed an order which says that one month%u2019s supply should be purchased at a time. Which of the following is correct assuming all other variables remain unchanged? The annual cost of carrying inventories will increase. The annual cost of carrying inventories will increase. The annual cost of carrying inventories will increase. The annual cost of carrying inventories will decrease. The annual cost of carrying inventories will decrease. The annual cost of carrying inventories will decrease. The annual cost of carrying inventories will not change. The annual cost of carrying inventories will not change. The annual cost of carrying inventories will not change. Annual ordering cost will increase
None of the above The annual cost of carrying inventories will increase. The annual cost of carrying inventories will decrease. The annual cost of carrying inventories will not change. Annual ordering cost will increase
None of the above

Explanation / Answer

Hi,

Please find the answer as follows:

The annual cost of carrying inventories will increase as more inventory will require more storage space and in some cases extra insurance.

Thanks.

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