Which of the Following Is Not an Assumption of the Basic

question 18

Multiple Choice

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

• A)Ordering or setup costs are constant
• B)Inventory holding cost is based on average inventory
• C)Diminishing returns to scale of holding inventory
• D)Lead time is constant
• E)Demand for the product is uniform throughout the period

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Definitions:

Straight-Line Depreciation

A scheme for dividing the expenditure of a solid asset over its life span in equal yearly quotas.

Asset

Anything of value owned by an individual or a corporation that can be used to produce positive economic value.

IRR

Internal Rate of Return, a metric used to estimate the profitability of potential investments.

Initial Cost

The original cost of acquiring an asset before any depreciation, amortization, or similar adjustment.