You are an executive of a business where the demand for your products has been stable and almost constant. You know that your supply chain manager, Tim Kluless, is purchasing the product at a constant price (with no quantity discounts) from a supplier. At the end of the fiscal year, Mr. Kluless submits a report with the following cost information:
Annual Ordering Costs = $650,000
Annual Inventory Holding Cost = $500,000
By looking at these two numbers, would you recommend that they increase or decrease their order quantity?