Answer Happy

A company has purchased one component from its supplier for
years. Since the production process of this component is quite
simple and involves no capital investment, the Operations Manager
proposes to make this component in house so that the component may
flow gradually into the assembly line for use. The following data
are also given for your comparison and decision making:
To buy
To make
Annual demand
30,000 units
30,000 units
Cost per unit
$9
$10
Fixed cost
$45 per order
$72 per batch
Holding cost (per unit per year)
$2.7
$3.0
Weekly demand*
600 units
600 units
Weekly production*
N/A
800 units
Lead time
5 days
N/A
* Operates 50 weeks a year
If the company decides to continue to buy from the supplier,
which of the following is not true?
Group of answer choices
If the fixed cost increases by a factor of 4, EOQ will increase
by a factor of 2
If the fixed cost increases by a factor of 4, the total annual
cost will increase by a factor of 2
If the annual demand and the inventory holding cost increases by
a factor of 2, the total annual cost remains the same
If the annual demand and the inventory holding cost increase by
a factor of 2, EOQ remains the same