Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 20 - Inventory Management, Just-in-Time, and Simplified Costing Methods - Assignment Material - Questions - Page 794: 20-7

Answer

Goal congruence issues can arise if there's an inconsistency between the EOQ model and the performance evaluation model used. For instance, if performance evaluation ignores opportunity costs, managers may be incentivized to order quantities larger than the optimal EOQ.

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