QUESTION 10 Consider the case where a business orders from a supplier using a co

Question

QUESTION 10 Consider the case where a business orders from a supplier using a continuous review (Q) system, and in quantities that are consistent with the Economic Order Quantity (EOQ) How should the following change to a cost parameter or a condition affect their order quantity (assuming that they adjust their order quantities accordingly)? If demand shows a consistent upward trend over time and has increased, then the order quantity should_ a increase O b. decrease Cnot be changed (stay the same) QUESTION 11 Consider the case where a business orders from a supplier using a continuous review (Q) system, and in quantities that are consistent with the Economic Order Quantity (EOQ). How should the following change to a cost parameter or a condition affect their order quantity (assuming that they adjust their order quantities accordingly)? If the company re-designs their ordering process such that it is less costly (administration-wise) for them to place orders, then the order quantity should a. increase b. decrease Gnot be changed (stay the same)

Explanation / Answer

Question 10:

The answer is given below:

a. increase

When the demand increases the order quantity needs to increased, the demand should allow the order quantity to be increased, so that it would reach the customer and satisfy on their needs impact increased profit of the organization.

Question 11

The answer is given below:

c. not to be changed(stay the same)

On redesigning the ordering process the order quantity needs to be same, because the demand which has made is been fixed.

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