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Asked Dec 22, 2019
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Why might goal-congruence issues arise when managers use an EOQ model to guide decisions on how much to order?

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Economic Order Quantity (EOQ): Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

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The goal congruence issue arises due to inconsistency in the EOQ model and model used to judge the performance of personnel who implement the EOQ model. The EOQ model define the other unit as EOQ unit while the purchase manager will consider another unit as based on purchase order model it will arise goal congruence issue.

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Cost Management

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