Which one of the following statements concerning the economic order quantity (EOQ)model is TRUE?
A) An increase in holding cost will increase the EOQ value.
B) A decrease in demand will increase the EOQ value.
C) A decrease in holding cost will increase the EOQ value.
D) None of the above are true.

Question

Quizplus · Accepted Answer

According to the EOQ model, a decrease in holding cost will increase the EOQ value. This is because holding cost is inversely proportional to the EOQ value in the formula, so a decrease in holding cost will result in a higher EOQ value. Option A is incorrect because an increase in holding cost would result in a lower EOQ value, and Option B is incorrect because a decrease in demand would result in a lower EOQ value as well.

Which One of the Following Statements Concerning the Economic Order