In the EPQ model,the total annual setup costs are given by ______.
A)(Annual demand / EPQ)* Setup cost
B)(Annual demand * EPQ)* Setup cost
C)(Annual demand * EPQ)/ Setup cost
D)(Annual demand / EPQ)/ Setup cost

Question

Quizplus · Accepted Answer

The formula for calculating the total annual setup cost in the EPQ model is given by (Annual demand / EPQ)* Setup cost. This formula takes into account the number of times the setup is done in a year, which is equal to the annual demand divided by the optimal production quantity (EPQ). Therefore, the correct option is (Annual demand / EPQ)* Setup cost, which is option A.

In the EPQ Model,the Total Annual Setup Costs Are Given