In order for a quantity discount purchase to make sense, the total cost of inventory (acquisition, holding and ordering costs) must be minimized.  True False

Answer

True.

In a quantity discount purchase scenario, businesses aim to order larger quantities to receive discounts, but this approach requires careful analysis of total costs. Total inventory costs encompass acquisition costs (the price paid for the goods), holding costs (the costs associated with storing inventory), and ordering costs (the costs incurred each time an order is placed).

To ensure that the purchase is beneficial, one must minimize these total costs. If the cost of holding extra inventory due to larger orders outweighs the savings from discounts, it may not be financially prudent to opt for larger purchase quantities. Thus, the statement is true as it emphasizes the importance of minimizing overall costs in making purchasing decisions.