Asked by Samantha Hicks on May 09, 2024
Verified
What are the assumptions of the EOQ model?
Assumptions
Premises or statements taken as true without proof for the purpose of argument or calculation in modeling and problem-solving.
- Apply mathematical techniques to solve problems associated with inventory, including issues on Economic Order Quantity and quantity discounts.
Verified Answer
SA
Salamatu AbdallahMay 15, 2024
Final Answer :
The more important assumptions of the basic EOQ model are demand is known and constant over time, the lead time, that is, the time between the placement of the order and the receipt of the goods, is known and constant, the receipt of the inventory is instantaneous; i.e., the goods arrive in a single batch, at one instant in time, quantity discounts are not possible, the only variable costs are the cost of setting up or placing an order and the cost of holding or storing inventory over time, and if orders are placed at the right time, stockouts or shortages can be completely avoided.
Learning Objectives
- Apply mathematical techniques to solve problems associated with inventory, including issues on Economic Order Quantity and quantity discounts.
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