The Fed increases the interest rate suddenly, leading to a sharp and immediate increase in loan interest rates. How will the EOQ behave in the immediate/short run? Assume all other variables stay relatively unchanged in the immediate term. EOQ = Sq root of [(2D*S)/H] D = annual demand in units S = cost of placing 1 order; H = cost of holding 1 unit of that item in inventory for 1 year     EOQ will not be affected       EOQ will increase       EOQ will decrease

Practical Management Science
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Author:WINSTON, Wayne L.
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Chapter2: Introduction To Spreadsheet Modeling
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The Fed increases the interest rate suddenly, leading to a sharp and immediate increase in loan interest rates. How will the EOQ behave in the immediate/short run? Assume all other variables stay relatively unchanged in the immediate term.

EOQ = Sq root of [(2D*S)/H]

D = annual demand in units

S = cost of placing 1 order; H = cost of holding 1 unit of that item in inventory for 1 year

   

EOQ will not be affected

 

   

EOQ will increase

 

   

EOQ will decrease

 

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