Compared to the EOQ, the economic production quantity would be approximately:
A)the same
B)20 percent larger
C)40 percent larger
D)20 percent smaller
E)40 percent smaller

Question

Quizplus · Accepted Answer

The economic production quantity (EPQ) typically results in a larger order quantity than the EOQ because it takes into account setup costs and the time it takes to produce the items. The EPQ formula involves multiplying the square root of (2DS / H) by the square root of (S / P), where D is the demand rate, S is the setup cost per production run, H is the holding cost per unit per year, and P is the production rate per period. This formula results in a 40 percent larger order quantity compared to the EOQ formula.

Compared to the EOQ, the Economic Production Quantity Would Be