Which of the following is not an assumption of the basic fixed-order quantity inventory model?
A) Ordering or setup costs are constant.
B) Inventory holding cost is based on average inventory.
C) Returns to scale of holding inventory are diminishing.
D) Lead time is constant.
E) Demand for the product is uniform throughout the period.

Question

Quizplus · Accepted Answer

The assumption of returns to scale of holding inventory being diminishing is not a part of the basic fixed-order quantity inventory model. The other assumptions include constant ordering or setup costs, inventory holding cost being based on average inventory, constant lead time, and uniform demand for the product throughout the period.

Which of the Following Is Not an Assumption of the Basic