Which of the following statements about the economic-order-quantity (EOQ)decision model is FALSE?
A)It assumes quality costs are irrelevant if quality is unaffected by the number of units purchased.
B)It assumes stockout costs are irrelevant if no stockouts occur.
C)It assumes purchasing costs are relevant when the cost per unit changes due to the quantity ordered.
D)It assumes ordering costs and carrying costs are relevant.

Question

Quizplus · Accepted Answer

The EOQ model primarily focuses on minimizing the total costs associated with ordering and holding inventory. It does not directly consider purchasing costs as a variable factor; instead, it assumes the cost per unit is constant regardless of the quantity ordered. The model's main concern is finding the optimal order quantity that minimizes the sum of ordering and carrying costs.

Which of the Following Statements About the Economic-Order-Quantity (EOQ)decision Model