Recent Interest Rate Increases Have Increased the Cost of Carrying

question 96

Multiple Choice

Recent interest rate increases have increased the cost of carrying the inventory.What will be the effect of this on EOQ, if the sales and order costs remain the same?

• A)EOQ will not change
• B)EOQ will increase
• C)EOQ will decrease
• D)EOQ will increase slightly

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Definitions:

Real Income

The purchasing power of income, after adjusting for inflation, indicating the actual quantity of goods or services that can be bought.

Middle-Income

Middle-Income refers to the socioeconomic class of individuals or families whose earnings fall between the upper and lower income brackets.

World Bank

A global financial organization that offers loans and grants to less wealthy nations' governments to support capital projects.

Developing Countries

Many countries of Africa, Asia, and Latin America that are characterized by lack of capital goods, use of nonadvanced technologies, low literacy rates, high unemployment, relatively rapid population growth, and labor forces heavily committed to agriculture.