In the economic order quantity (EOQ) model, if the holding cost and the ordering cost both double, the value of Q* will:
A)decrease by 50%.
B)remain unchanged.
C)double.
D)quadruple.

Question

Quizplus · Accepted Answer

The EOQ formula is Q* = sqrt((2DS)/H), where D is the demand, S is the ordering cost, and H is the holding cost. If both the ordering cost (S) and the holding cost (H) double, the increase in S and H cancels each other out in the formula, leaving Q* unchanged.

In the Economic Order Quantity (EOQ) Model, If the Holding