A firm that is presently using the economic order quantity model and is planning to switch to the economic production lot size model can expect
A)the Q* to increase.
B)the maximum inventory level to increase.
C)the order cycle to decrease.
D)annual holding cost to be less than annual setup cost.

Question

Quizplus · Accepted Answer

In the economic production lot size model, production occurs gradually, so the optimal order quantity (Q*) tends to increase compared to the economic order quantity model, where the entire order is received at once.

A Firm That Is Presently Using the Economic Order Quantity