Tom and Sally Jones are preparing to purchase a new car. Tom currently has a Toyota Camry and Sally has a Honda Accord. They now
1 answer:
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Answer:
Their order quantity will rise but the time between orders will fall.
Explanation:
Let's analyse the EOQ formula:
If Demand increases
The dividend increase, so the quotient increase.
EOQ will rise.
<u>Only options b and c are correct on that statment.</u>
Now let's check the time between order:
If we analyze the increase in demand:
√(2xΔDxS/H)/ ΔD
everything else is keep constant so we have:
√(CxΔD)/ ΔDx
If we use L'Hopital we can conclude this function limit is zero.
Anyway a more easy way to do it will be calculate with a demand of 1000
and then with a demand of 50,000 to notice how much the time between order decrease.
√(1000) / 1000 = 0.031622776
√(51000)/ 51000 = 0.004428074
<u>so we have EOQ increase and days between order decrease.</u>
Now only option B is correct !