Question
Download Solution PDFWhich of the following does NOT belong to assumptions in calculating EOQ in the basic inventory model?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFConcept:
The Economic Order Quantity (EOQ) model is a fundamental inventory management formula used to determine the optimal order quantity that minimizes total inventory costs, including ordering and holding costs.
Standard Assumptions of EOQ:
- Demand is known, constant, and continuous
- Lead time (the time between ordering and receiving) is constant
- Replenishment is instantaneous (all items are delivered at once)
- No stockouts or shortages are allowed
- Ordering and holding costs are constant and known
Analysis:
Option 1: "Material cannot be supplied in variable quantities" – This is not a part of EOQ assumptions. EOQ aims to determine the best (variable) quantity to order, making this statement invalid in the EOQ context.
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