Annual cost of carrying inventories
A company places purchase orders to buy two week's supply at a time. Oscar Chen has joined as the director of finance and has passed an order which says that one month's supply should be purchase at a time. Which of the following is correct assuming all other variables remain unchanged?
a) The annual cost of carrying inventories will increase
b) The annual cost of carrying inventories will decrease
c) The annual cost of carrying inventories will not change
d) Annual ordering cost will increase
e) None of above