Which of the following statements is true of the economic-order-quantity decision model?
A) It assumes purchasing costs are relevant because the cost per unit changes due to the quantity ordered.
B) Demand, ordering costs, and carrying costs are all known with certainty.
C) It assumes that stockout costs are relevant even if no stockouts occur.
D) It assumes that ordering costs and carrying costs are irrelevant.

Question

Quizplus · Accepted Answer

The economic-order-quantity (EOQ) model assumes that demand, ordering costs, and carrying costs are known with certainty, which allows for the calculation of an optimal order quantity that minimizes total inventory costs.

Which of the Following Statements Is True of the Economic-Order-Quantity