Question

If the demand for an item is doubled and the ordering cost halved, the economic order quantity

• A. increases by factor of $\sqrt{2}$
• B. remains unchanged
• C. is doubled
• D. is halved

Answer 1

The correct option is B remains unchanged

Economic order quantity,

$EOQ=\sqrt{\frac{2D{C}_0}{C_h}}$

Economic order quantity, when demand is doubled and ordering cost halved,

$EO{Q}^{\prime }=\sqrt{\frac{2\left(2D\right)\left(\frac{C_0}{2}\right)}{C_h}}$

$EO{Q}^{\prime }=EOQ$

So, Economic order quantity remains unchanged.