An assumption of economic order quantity is that demand is steady. A decrease in demand or usage rates will lead to:
A) inventory shortfalls
B) excess inventory
C) efficient level of inventory
D) change in the kind of inventory held

Question

Quizplus · Accepted Answer

Economic order quantity assumes that demand is steady and constant. A decrease in demand or usage rates will result in excess inventory, as EOQ is based on a fixed demand rate. This excess inventory can lead to additional costs in storage, handling, and disposal. Therefore, option B is the best choice as it reflects the impact of a decrease in demand on inventory levels.

An Assumption of Economic Order Quantity Is That Demand Is