Which of the Following Is True of the EOQ Model

question 1

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) The EOC is the same for all comppanies.

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Definitions:

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, often with interest.

Principal Debtor

A principal debtor is an individual or entity primarily responsible for fulfilling the obligations of a debt or loan.

Surety

A person, such as a cosigner on a note, who agrees to be primarily responsible for the debt of another.

Guarantor

A person who agrees to satisfy the debt of another (the debtor) only after the principal debtor defaults. A guarantor’s liability is thus secondary.