A firm is presently using the basic EOQ model and is conside

A firm is presently using the basic EOQ model and is considering switching to the economic production lot size model. If everything else stays the same, what change should the firm expect?

a. economic order quantity decreases

b. annual carrying costs increase

c. average inventory level decreases

d. maximum inventory level increases

Solution

If everything else stays the same, then the firm expect the average inventory level decreases.