Detailed Answer
Answer (D) is correct.
The economic lot size for a production system is similar to the EOQ. For
example, the cost per set-up is equivalent to the cost per order (a
numerator value in the EOQ model). Hence, a reduction in the setup
costs reduces the economic lot size as well as the relevant costs. The
fixed facility and administrative costs, however, are not relevant. The
basic EOQ model includes variable costs only.