Which of the Following Is True of the EOQ Model

question 23

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 annual sales, in units, increases by 20%, then EOQ will increase by 20%.
• B) If the average inventory increases by 20%, then the total carrying costs will increase by 20%.
• C) If the average inventory increases by 20% the total order costs will increase by 20%.
• D) The EOC is the same for all companies.
• E) If the fixed per order cost increases by 20%, then EOQ will increase by 20%.

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Definitions:

Specialization

The practice of focusing on a narrow area of work or study to gain efficiency or expertise.

Trade

The act of buying, selling, or exchanging goods and services between people or entities within or across borders.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than its competitors.

Televisions

Electronic devices designed for the reception and display of audiovisual content transmitted over airwaves or through cable systems.