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Suppose that in the EOQ model we can only order batches that are an integer multiple of some number QB, i.e., we can order a batch of size QB, 2QB, 3QB, . . .. Let Q* be the optimal order quantity in that model. Then, we can find a natural number m? N which allows us to write Q* = mQB. Further, let QE be the EOQ, i.e., QE = p 2KD/h.
(a) Show that the following relation holds true sqrt((m - 1)/m) = (QE/Q*) = sqrt((m + 1)/m).
(b) What is the underlying reasons that this relation holds?
(c) Provide an interpretation of that relation.
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