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 make the component in house, which of
the following is not true?
Group of answer choices
If the fixed cost increases by a factor of 4, EPQ will increase
by a factor of 2
If the annual demand increases by a factor of 4, the average
inventory will increase by a factor of 2
If the fixed cost increases by a factor of 4, the total annual
stocking cost (i.e., ordering cost and holding cost) will increase
by a factor of 2
If both the weekly demand rate and the weekly production rate
increase by a factor of 4, EPQ will increase by a factor of 2