Operations Research and Operations Management · Production Control · 2 marks · Multiple choice
In classical EOQ, Q is optimal order quantity and C is minimum annual ordering-plus-holding cost. If quantity is incorrectly set to Q′ = 2Q, find corresponding C′.
At EOQ, annual ordering and holding costs each equal C/2. Doubling quantity halves ordering cost to C/4 and doubles holding cost to C. Total C′ = C/4+C = **1.25C, A**.
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