Blue Star Co.has been using the production order quantity inventory model.If annual demand, daily demand, and the production rate increase to four times their original amounts, which of the following is/are possible consequence(s)?
A)The order quantity will double.
B)The order quantity will increase by four times.
C)The order quantity will be cut in half.
D)There is no impact on order quantity.

Question

Quizplus · Accepted Answer

The order quantity in the production order quantity model is proportional to the square root of the demand. If the demand increases by four times, the order quantity will increase by the square root of four, which is two times the original order quantity.