If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand Q* = $\sqrt { \frac { 2 \cdot D \cdot S } { H } }$
A) is smaller than the holding cost per unit
B) is zero
C) is one-half of the economic order quantity
D) is affected by the amount of product cost
E) goes down if the holding cost per unit goes down

Question

Quizplus · Accepted Answer

The average amount of inventory on hand in the Economic Order Quantity (EOQ) model is one-half of the EOQ itself, as inventory levels rise to the EOQ before dropping to zero, averaging out at half the EOQ over time.

If the Actual Order Quantity Is the Economic Order Quantity 2⋅D⋅SH\sqrt { \frac { 2 \cdot D \cdot S } { H } }H2⋅D⋅S​​

If the Actual Order Quantity Is the Economic Order Quantity $\sqrt { \frac { 2 \cdot D \cdot S } { H } }$