Final answer:
When the EOQ is too low for a quantity discount, increase the order to the minimum discount threshold and compare the total costs to ensure that savings from the discount outweigh any additional holding costs.
Step-by-step explanation:
When calculating the Economic Order Quantity (EOQ) with quantity discounts, and the EOQ calculated at the discount price is too low to qualify for the discount, the correct action is to adjust the order quantity. You should increase the order quantity to the minimum level required to obtain the discount. It is essential to then perform a total cost analysis comparing the cost of ordering at the EOQ without the discount against the cost of ordering at the minimum level required to receive the discount.
If ordering at the increased quantity leads to a lower total cost, it might be more economical to order at that level. This decision often involves weighing the savings from the discount against the additional holding costs incurred from purchasing more inventory.