This Active Model appears in myomlab. It allows you to evaluate the sensitivity of the EOQ and associated costs to changes in the demand and cost parameters.

QUESTIONS

1. What is the EOQ and what is the lowest total cost?
2. What is the annual cost of holding inventory at the EOQ and the annual cost of ordering inventory at the EOQ?
3. From the graph, what can you conclude about the relationship between the lowest total cost and the costs of ordering and holding inventory?
4. How much does the total cost increase if the store manager orders twice as many bird feeders as the EOQ? How much does the total cost increase if the store manager orders half as many bird feeders as the EOQ?  
5. What happens to the EOQ and the total cost when demand is doubled? What happens to the EOQ and the total cost when unit price is doubled?
6. Scroll through the lower order cost values and describe the changes to the graph. What happens to the EOQ?
7. Comment on the sensitivity of the EOQ model to errors in demand or cost estimates.