Blue Star Co.has been using the production order quantity inventory model.If annual demand,daily demand,and the production rate increase to four times their original amounts,which of the following is/a possible consequence?

Question

Quizplus · Accepted Answer

When annual demand, daily demand, and the production rate all increase by four times, the production order quantity, which is influenced by the square root of the demand rate over the production rate (among other factors), will increase, but not linearly with these rates. The increase in both demand and production rates in the same proportion tends to balance out, leading to a square root effect on the order quantity, hence doubling it.