Final answer:
The increase in both demand and unit value by 15 percent will increase the EOQ. However, due to the square root in the EOQ formula, the increase is not the sum of the percentages, and the exact percentage cannot be determined from the information provided.
Step-by-step explanation:
The Economic Order Quantity (EOQ) is a formula used in inventory management to determine the optimal order quantity that minimizes the total holding costs and ordering costs. The question at hand is to identify the effect on EOQ when the demand for an item increases by 15 percent, and the value of each unit also increases by 15 percent, assuming all other factors remain constant. To solve this, we can refer to the EOQ formula:
EOQ = √((2DS)/H)
Where:
D = Demand
S = Setup costs (or ordering costs per order)
H = Holding costs (or carrying costs per unit per year)
Since the demand (D) and the unit value (which can affect the holding cost H) both increase by the same percentage, and the EOQ formula involves the square root of the product of these two variables, the EOQ will increase, but not by the full 30 percent (which would be the sum of the individual percentages). It's a common misconception to add the percentages of increase directly, but because the EOQ formula involves the square root, the effect on EOQ is less than the sum of the changes.