BUISENESS MANAGEMENT
INVENTORY CONTROL
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is not an assumption of the basic fixed-order quantity inventory model?
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Ordering or setup costs are constant
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Inventory holding cost is based on average inventory
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Diminishing returns to scale of holding inventory
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Lead time is constant
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Explanation:
Detailed explanation-1: -Answer and Explanation: The correct option is c). Price per unit of product is constant. A fixed order quantity (FOQ) can be defined as the inventory management technique in which the organizations place the inventory order when the stock reduces to re-order stock point.
Detailed explanation-2: -The assumptions behind the economic order quantity (EOQ) model include all of the following EXCEPT: a constant rate of demand.
Detailed explanation-3: -∴ So, stochastic demand is not an underlying assumption of the basic EOQ model.
There is 1 question to complete.