If the Costs (S and H) and Demands (D) Are

question 17

Multiple Choice

If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?

• A) The EPQ model produces a lower total annual cost.
• B) The maximum inventory level is lower under the EPQ model than under the EOQ model.
• C) Both models use the same formula to compute annual ordering cost.
• D) The inventory depletion rate is not the same for both models.
• E) The two models use different formulas to compute annual holding cost.

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Definitions:

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Level Of Significance

A threshold chosen by the researcher which determines the probability of rejecting the null hypothesis when it is actually true, commonly denoted by alpha (α).

Null Hypothesis

A type of hypothesis used in statistics that proposes that no significant difference exists in a set of given observations.

Fair Die

A die that has an equal probability of landing on any one of its faces when thrown.