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EOQ calculation: what is the revised EOQ?

Question 12: A product whose EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10. The revised EOQ is:

a) three times as large
b) one-third as large
c) nine times as large
d) one-ninth as large
e) cannot be determined

Please select the right answer and explain how you have calculated it.

Solution Preview

EOQ = SQRT ( 2 X Demand x Ordering Cost / Holding Cost)

Let 2 x ...

$2.19