Even though the economic order quantity (EOQ) is optimal only when five assumptions are satisfied, it serves as a reasonable first approximation even when these assumptions do not quite apply. Which one of the following is NOT an assumption of the EOQ?
A) Quantity discounts can be taken advantage of for large lot sizes.
B) The amount of an order received is exactly equal to what was ordered, without any "short shipments" from a supplier or scrap losses in the shop.
C) Decisions for one item can be made independently of decisions made for other items.
D) There is no uncertainty in lead time.

Question

Quizplus · Accepted Answer

Quantity discounts are not an assumption of the EOQ model; the EOQ assumes constant prices regardless of order size.

Even Though the Economic Order Quantity (EOQ) Is Optimal Only