Question 2 PROVIDE DETAILED SUPPORT FOR YOUR ANSWER A company using an EOQ polic

Question

Question 2 PROVIDE DETAILED SUPPORT FOR YOUR ANSWER

A company using an EOQ policy enjoys rising annual demand for their products for three consecutive years. Their holding cost and ordering cost remain constant during this time. Which one of the following statements is TRUE?

Select one:

a. Their order quantity will rise but the time between orders will fall.

b. Their order quantity will fall and so will the time between orders.

c. Their order quantity will fall but the time between orders will rise.

d. Their order quantity will rise and so will the time between orders.

Explanation / Answer

d. Their order quantity will rise and so will the time between orders.

Due to increase in demand you will have 2 options

Increase Order Quantity and increase the time interval between orders: This is better option as this will make sure there are no stock outs and frequent ordering will also will not be required.

Decrease Order Quantity and decrease time interval between orders.

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