Which of These Statements About the Production Order Quantity Model

question 101

Multiple Choice

Which of these statements about the production order quantity model is False?

• A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous.
• B) Because receipt is noninstantaneous, some units are used immediately, not stored in inventory.
• C) Average inventory is less than one-half of the production order quantity.
• D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity.
• E) None of the above is False.

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Definitions:

FASB

Refers to the Financial Accounting Standards Board, which is the organization responsible for establishing accounting and financial reporting standards in the United States.

Service Business

A company that provides intangible products or services to customers, as opposed to selling physical goods.

Managerial Accounting

A field of accounting focused on providing information to internal users to aid in decision-making, planning, and controlling operations.

Financial Accounting

The field of accounting that focuses on tracking and reporting the financial transactions of a business, resulting in the creation of financial statements.