Answer : EOQ stands for Economy Of Order Quantity. Its helps you calculate the o

Question

Answer :

EOQ stands for Economy Of Order Quantity. Its helps you calculate the optimum economy where it can tell you the right or the minimum quantity of goods required to minimise costs. It can be calculated by using a simple formulae.

Economic order quantity = [(2 x demand x ordering costs) / (Holding costs) ]

Q = (2DS/H)

Since this questions does have any constant, its safe to state that if ordering cost decreases by 64%, the EOQ will will also reduce by a certain %, since it'll bring down the whole value of the equation because Ordering Costs are a part of the numerator. And any decrease in the net value of the numerator will result in the overall decrease of the EOQ.

Explanation / Answer

In the basic EOQ model, if ordering cost decreases by 64%, the EOQ will:

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