If the demand for an item is trebled and the order cost is reduced to one third, then the economic order quantity_________________?
Correct answer: D. Remains unchanged
- A. Is trebled
- B. Decreases by a factor of 1/3
- C. Decreases by a factor of 3
- D. Remains unchanged
Explanation
EOQ is proportional to the square root of demand multiplied by ordering cost: Q = √(2DS/H). Tripling D and reducing S to one-third leaves DS unchanged, so EOQ remains unchanged.
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