In the Basic EOQ Model,if Lead Time Increases from Five

question 108

Multiple Choice

In the basic EOQ model,if lead time increases from five to 10 days,the EOQ will:

• A)double.
• B)increase,but not double.
• C)decrease by a factor of two.
• D)remain the same.
• E)increase by the same ratio as lead time.

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Definitions:

Economic Profits

The surplus remaining after total costs are subtracted from total revenues, taking into account both explicit and implicit costs.

Accounting Profits

The difference between total revenue and explicit costs; the net income a firm reports on its income statement.

Total Costs

The aggregate of all expenses associated with manufacturing products or services, which includes fixed and variable costs.

Most Efficient Output

The level of production at which a firm achieves the lowest possible cost per unit, maximizing productivity and minimizing waste.