Question

If demand INCREASES by 13% and the value of each unit INCREASES by 13%, what will happen to the EOQ? (Assume that everything else remains the same).

Answer 1

The EOQ will remain the same

Explanation:

EOQ(Economic order quantity) is the commercial quantity terminology. The value of an efficient order is the optimal amount of the item to be ordered concurrently so that the combined annual production expenses and material transfer are reduced. The optimal lot size is also called as the EOQ.

In 1913, Ford W. Harris created this production planning pattern and was improved in the course of time. The model implies that the cost of production, purchasing, and holding remains constant.

The EOQ is the ideal request quantity for a business that minimises its overall cost for orders, receipts and inventory holdings. In cases where demand, purchasing, and holding costs remain constant with the period, the EOQ formula is usually applied.