Which of the Following Is an Assumption of the Basic

question 22

Multiple Choice

Which of the following is an assumption of the basic fixed-order quantity inventory model?

• A) Lead times are averaged.
• B) Ordering costs are variable.
• C) Price per unit of product is constant.
• D) Backorders are allowed.
• E) Stock-out costs are high.

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Definitions:

Cash Payment

A financial transaction where an exchange of money occurs to settle a debt or purchase goods or services.

Common Stock

Equities representing ownership interests in a corporation, entitling holders to dividends and voting rights.

General Journal

A comprehensive listing of all a company’s financial transactions, recorded in chronological order.

Cash Investment

Placement of funds into a venture or asset with the expectation of generating income or profit.