Exam IIA-CIA-Part3 Topic 6 Question 202 Discussion

Actual exam question for IIA's IIA-CIA-Part3 exam
Question #: 202
Topic #: 6
The economic order quantity is the size of the order that minimizes total inventory costs which include ordering and holding (carrying) costs. It can be calculated using the formula:

If:
Q = order size in units
D = annual demand in units
P = cost per purchase order
S = carrying cost per year for one unit of inventory
If the annual demand decreases by 36% the optimal order size will

Suggested Answer: A Vote an answer

D decreases by 36%, that is, from 100% to 64%. Because .64 is the square of .8, the EOQ for .64D (Q1) equals 80% of the EOQ for D(Q).

by Geoff at Feb 25, 2025, 08:05 AM

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