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 less than one-half of the production order quantity.
D)All else equal,the smaller the ratio of demand rate to production rate,the larger is the production order quantity.
E)None of the above is false.

Question

Quizplus · Accepted Answer

The statement "All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity" is actually true. The smaller the ratio, the longer the production runs, which reduces the setup costs and makes larger production batches more economical.

Which of These Statements About the Production Order Quantity Model