ECONOMICS

Detailed explanation-1: -EOQ will increase as the annual demand and the cost of ordering increase and it will decrease as the cost of carrying inventory and the unit cost increase.

Detailed explanation-2: -The economic order quantity (EOQ) is a company’s optimal order quantity that meets demand while minimizing its total costs related to ordering, receiving, and holding inventory. The EOQ formula is best applied in situations where demand, ordering, and holding costs remain constant over time.

Detailed explanation-3: -Which of the following statements concerning the basic EOQ model is true? If an actual order quantity is smaller than-the EOQ, the annual holding cost is less than the annual ordering cost. An increase in holding cost will increase the EOQ value.

Detailed explanation-4: -Run size exceeds maximum inventory is not true about the EOQ model. Explanation: EOQ model is also referred to as the production lot size or the non-instantaneous gradual model. In the economic order quantity model, the rate of consumption and replenishment is not the same.