Which of the following is not true for the EPQ model?
A)Usage rate is assumed to be constant.
B)Production rate exceeds usage rate.
C)The maximum inventory occurs just after production ceases.
D)There are no ordering or setup costs.
E)Average inventory is calculated as one-half maximum inventory.

Question

Quizplus · Accepted Answer

The EPQ model does not assume that there are no ordering or setup costs. In fact, these costs are taken into consideration when determining the optimal order quantity.

Which of the Following Is Not True for the EPQ