Which of the Following Is Not True for the EOQ

question 18

Multiple Choice

Which of the following is not true for the EOQ model with gradual replenishment?

• A)Demand is constant
• B)Production rate exceeds usage rate
• C)Run size exceeds maximum inventory
• D)There are no setup costs
• E)Average inventory is one-half maximum inventory

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Definitions:

Allocated Fixed Costs

Fixed costs that are assigned or distributed across different departments, products, or activities within a company for budgeting and accounting purposes.

Direct Fixed Manufacturing Costs

Fixed costs directly associated with the manufacturing process, such as salaries of production supervisors.

Discontinue

The process of ending the production and sale of a product or service, often due to strategic reevaluation or lack of success.

Purchasing Per Unit

The cost associated with buying an individual unit of product or material.