Which of the Following Is True of the EOQ Model

question 26

Multiple Choice

Which of the following is true of the EOQ model? Note that the optimal order quantity, Q, will be called EOQ.

• A) If the fixed per order cost increases by 20%, then EOQ will increase by 20%
• B) If the annual sales, in units, increases by 20%, then EOQ will increase by 20%.
• C) If the average inventory increases by 20%, then the total carrying costs will increase by 20%.
• D) If the average inventory increases by 20% the total order costs will increase by 20%.
• E) None of the above is true.

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Definitions:

Incentives

Rewards or motivators provided to encourage specific actions or behaviors in individuals or groups.

Potential Interferences

Possible disturbances or disruptions that could negatively affect the outcome of an action or process.

Expected Outcomes

Anticipated results or consequences of an action or series of actions.

Highly Visible

Refers to something easily seen or noticed, often implying it attracts much attention or scrutiny.