Which of these statements about the production order quantity model is FALSE?
A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous.
B) Because receipt is noninstantaneous, some units are used immediately and not stored in inventory.
C) Average inventory is more than one-half of the production order quantity.
D) All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity.
E) None of these is false.

Question

Quizplus · Accepted Answer

Average inventory is actually less than one-half of the production order quantity in the production order quantity model. The correct statement would be that the maximum inventory level is more than one-half of the production order quantity.

Which of These Statements About the Production Order Quantity Model