Which of the following statements about the basic EOQ model is False? A) If the setup cost were to decrease, the EOQ would fall. B) If annual demand were to double, the number of orders per year would increase. C) If the ordering cost were to increase, the EOQ would rise. D) If annual demand were to double, the EOQ would also double. E) All of the above statements are true.

Question

Quizplus · Accepted Answer

Doubling the annual demand would result in a fourfold increase in the EOQ, not a doubling. The EOQ is proportional to the square root of annual demand, meaning that if annual demand doubles, the EOQ will increase by a factor of √2 (approximately 1.4), resulting in an order quantity that is approximately 2.8 times as large as the original EOQ.

Which of the Following Statements About the Basic EOQ Model