Problem: The purchasing department begins to use EOQs for lot sizing, which results in fewer purchase orders being generated. What can be said of the resulting cost savings?
1. Ideally, as purchasing activity decreased, purchasing staff will spend their extra time on other cost reducing activities
2. Realistically, staff and costs in the pruchasing department will increase
3. According to conventional thinking, the purchase lot size reductions will result in greater storage (carrying) costs, offsetting the expected savings.
4. All of the above