In the basic economic order quantity (EOQ) model, a doubling of estimated annual demand would lead to what change in Q*?
A)A doubling.
B)No change.
C)More than a 50% decrease.
D)Less than a 50% increase.

Question

Quizplus · Accepted Answer

In the basic EOQ model, Q* is proportional to the square root of annual demand. Therefore, a doubling of estimated annual demand would lead to less than a 50% increase in Q*. Specifically, Q* would increase by a factor of the square root of 2, which is approximately 1.41.

In the Basic Economic Order Quantity (EOQ) Model, a Doubling