Which of the Following Is Not an Assumption of the EOQ

question 13

Multiple Choice

Which of the following is not an assumption of the EOQ model?

• A)demand is known and constant
• B)no shortages allowed
• C)lead time is determined by quantity ordered
• D)order quantity is received all at once

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Definitions:

Constructive Capitalization

An accounting method that records a leasing agreement as a purchase and leaseback transaction for financial reporting purposes.

Capital Leases

Leases that are recognized by the lessee as an asset and liability on the balance sheet, based on the assumption that it involves the transfer of ownership over the lease term.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, showing the company's financial position.

Operating Lease

A lease agreement for the use of an asset without ownership transfer.