Question: The XYZ firm is using a continuous inventory quantity system and is currently ordering 500 units every time an order is placed. Their annual order

The XYZ firm is using a continuous inventory quantity system and is currently ordering 500 units every time an order is placed. Their annual order costs are Rs.800 and their annual carrying costs are Rs.400. To minimize their total annual inventory costs the firm should reduce the order quantity so that it is less than 500 units. Do you think that is correct? Give reason.

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