A product whose EOQ is 40 units experiences an increase in ordering cost from $10 per order to $90 per order. The revised EOQ is:
A) three times as large.
B) one-third as large.
C) nine times as large.
D) one-ninth as large.
E) cannot be determined

Question

Quizplus · Accepted Answer

The Economic Order Quantity (EOQ) formula is EOQ = sqrt((2DS)/H). An increase in ordering cost (S) from $10 to $90 increases the EOQ by a factor of sqrt(9), which is 3. Thus, the EOQ becomes three times as large.

A Product Whose EOQ Is 40 Units Experiences an Increase