Which one of the following statements concerning the economic order quantity (EOQ)is TRUE?
A)The EOQ is the order quantity that minimizes annual inventory holding costs.
B)An increase in demand will increase the EOQ.
C)The time between orders (TBO)will increase with an increase in holding costs.
D)The EOQ formula assumes that there are only three relevant costs: holding,transportation,and setup.

Question

Quizplus · Accepted Answer

An increase in demand will increase the EOQ because the EOQ formula includes demand as a factor, and higher demand leads to larger optimal order quantities to minimize total costs.

Which One of the Following Statements Concerning the Economic Order