Question

In an ideal inventory control system, the economic lot size for a part is 1000. If the annual demand for the part is doubled, the new economic lot size required will be

• A. 2000
• B. $1000/\sqrt{2}$
• C. 500
• D. $1000\sqrt{2}$

Answer 1

The correct option is D $1000\sqrt{2}$

Economic order quantity,

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

Given that EOQ = 1000 units

When demand is doubled,

$EO{Q}^{\prime }=\sqrt{\frac{2\left(2D\right)C_0}{C_h}}=\sqrt{2}\sqrt{\frac{2D{C}_0}{C_h}}$

$=\sqrt{2}EOQ=1000\sqrt{2}$