In computing Wilson’s economic lot size for an item, by mistake, the demand rate estimate used was 40% higher than the true demand rate. Due to this error in the lot size computation, the total cost of set-ups plus inventory holding per unit time would rise above the true optimum by approximately

In computing Wilson’s economic lot size for an item, by mistake, the

1.	In computing Wilson’s economic lot size for an item, by mistake, the demand rate estimate used was 40% higher than the true demand rate. Due to this error in the lot size computation, the total cost of set-ups plus inventory holding per unit time would rise above the true optimum by approximately
A.	1.4%
B.	6.3%
C.	18.3%
D.	8.7%
Answer» D. 8.7%

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In computing Wilson’s economic lot size for an item, by mistake, the demand rate estimate used was 40% higher than the true demand rate. Due to this error in the lot size computation, the total cost of set-ups plus inventory holding per unit time would rise above the true optimum by approximately

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