Economics · Inventory Models
Alpha Co buys material X from an adjacent supplier. When an order is placed, the supplier sets up a special production run taking several days, and delivers material X in small batches from the time production starts until the order is complete. If Alpha Co switches from using the Economic Order Quantity (EOQ) model to the Economic Batch Quantity (EBQ) model, assuming the total annual requirement remains unchanged, what would be the effect on the Order Quantity and the Number of Orders per year?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Order Quantity: Increase; Number of orders per year: Increase
- 2Order Quantity: Increase; Number of orders per year: Decrease✓
- 3Order Quantity: Decrease; Number of orders per year: Decrease
- 4Order Quantity: Decrease; Number of orders per year: Increase
Correct answer
Order Quantity: Increase; Number of orders per year: Decrease
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