1) Recall that the calculation of the optimal economic order quantity in the EOQ model, with demand D, ordering cost K, and carrying cost h. Consider a more complicated model, in which the ordering cost is not a constant. It includes the flat fee K, but in addition there is a fixed shipment cost x per each ordered unit. How will this affect the optimal order quantity that results from the calculation?

a) The optimal EOQ will increase by x/h. b) The optimal EOQ will decrease by x/h. c) The optimal EOQ will be multiplied by (1 + x/h). d) The optimal EOQ will not be affected at all.

2) True or false: The costs of underage and overage for a news-vendor are cu = $2.40 and co = $1.15, respectively; the difference between the selling price and the salvage value per unit is $1.25.