Which of the Following Is Not an Assumption Associated with the Basic

question 59

Multiple Choice

Which of the following is not an assumption associated with the basic economic order quantity (EOQ) model?

• A)no inventory in transit
• B)an infinite planning horizon
• C)stockouts are permitted
• D)a constant and known replenishment or lead time

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Definitions:

Periodic Inventory System

An accounting method where inventory is physically counted at specific periods to determine the cost of goods sold.

FIFO

An inventory valuation method that assumes the first items placed in inventory are the first sold, standing for First In, First Out.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core activities.

Periodic Inventory System

An accounting method where inventory is updated and cost of goods sold is calculated at the end of an accounting period.