Which of the Following Is Not an Assumption of the Economic

question 6

Multiple Choice

Which of the following is not an assumption of the Economic Order Quantity model?

• A) demand for the product is known with certainty
• B) total cost per year of placing orders is fixed
• C) lead time is known and is constant
• D) there are no quantity discounts

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Definitions:

Predictable Demand

The level of product or service consumption that can be forecasted with a high degree of accuracy based on historical data and market analysis.

Working Capital

The amount of available capital that a company can readily use for day-to-day operations, calculated as current assets minus current liabilities.

Stockouts

Occurs when an item is not in stock and cannot be provided to the customer, leading to lost sales or customer dissatisfaction.

Basilic Vein

A large vein on the inner side of the upper arm and forearm, often used for intravenous injections or blood sampling.