Which One of the Following Is Not an Assumption of the EOQ

question 188

Multiple Choice

Which one of the following is not an assumption of the EOQ model?

• A) Decisions for one item can be made independently of decisions made for other items.
• B) There is no uncertainty in lead-time.
• C) The amount of an order received is exactly equal to what was ordered, without any "short shipments" from a supplier or scrap losses in the shop.
• D) Quantity discounts can be taken advantage of for large lot sizes.

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Definitions:

Payables Turnover

A financial ratio that measures how quickly a company pays its suppliers by comparing net credit purchases with the average accounts payable over a period.

Cash Cycle

The period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, often used to assess the efficiency of inventory management.

Accounts Receivable Turnover

A measure of how efficiently a company collects its outstanding credit sales, calculated as sales divided by average accounts receivable.