A product whose EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10. The revised EOQ is

A) three times as large.
B) one-third as large.
C) nine times as large.
D) one-ninth as large.
E) cannot be determined.

EOQ = √[(2AD)/H]
where A = annual demand, D = ordering cost per order, H = holding cost per unit
Initial EOQ = √[(2AD)/H] = √[(2*40*D)/H]
New ordering cost = $10
New EOQ = √[(2AD)/H] = √[(2*A*10)/H]
Let's compare the two EOQs:
Initial EOQ = √[(2*40*D)/H]
New EOQ = √[(2*A*10)/H]
We know that $90 was the initial ordering cost, we don't know the annual demand, and we don't know the holding cost, so we cannot find the exact numerical value of the new EOQ. However, we can compare the two EOQs without having the exact numerical value. Since the ordering cost decreased from $90 per order to $10 per order, the new EOQ will be smaller. Therefore, the revised EOQ is one-third as large as the initial EOQ.