A firm is presently using the basic EOQ model and is considering switching to the economic production lot size model.If everything else stays the same,what change should the firm expect?
A)economic order quantity decreases
B)annual carrying costs increase
C)average inventory level decreases
D)maximum inventory level increases

Question

A firm is presently using the basic EOQ model and is considering switching to the economic production lot size model.If everything else stays the same,what change should the firm expect?​
A)​economic order quantity decreases
B)​annual carrying costs increase
C)​average inventory level decreases
D)​maximum inventory level increases

Quizplus · Accepted Answer

Economic production lot size model is designed for production environments where the setup cost is time-related and the order quantity is produced at a constant rate until the economic lot size has been reached. So, the economic production lot size model reduces the average inventory level.

A Firm Is Presently Using the Basic EOQ Model and Is