Which basic EOQ assumption does the EPQ model relax?a.Lead time is known and constant.b.Orders arrive at once.c.Quantity discounts are not considered.d.Demand is known and constant.
Question
Which basic EOQ assumption does the EPQ model relax?a.Lead time is known and constant.b.Orders arrive at once.c.Quantity discounts are not considered.d.Demand is known and constant.
Solution
The Economic Production Quantity (EPQ) model relaxes the assumption that "Orders arrive at once". Unlike the Economic Order Quantity (EOQ) model, which assumes that orders are received in a single batch, the EPQ model allows for production and usage to happen simultaneously. This means that inventory can be replenished gradually, as items are being produced and used at the same time.
Similar Questions
Which of the following is an assumption of the basic EOQ model?a.Quantity discounts are considered.b.Lead time is known and constant.c.Demand may be seasonal.d.Orders can arrive in partial shipments.
If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?a.The two models use different formulas to compute annual ordering cost.b.The inventory depletion rate is the same for both models.c.The maximum inventory level is lower under the EPQ model than under the EOQ modeld.The EPQ model produces a lower total annual cost.
The economic order quantity (EOQ) equation perfectly balances the tradeoff between order costs (or setup costs) and inventory holding costs (or financial opportunity costs). True False
How can the EPQ model be economically reconciled with just-in-time (JIT) production?a.Reduce annual demand (D).b.The two cannot be reconciledc.Increase annual holding cost per unit (H).d.Decrease ordering cost (S).
The Economic Order Quantity (EOQ) represents the order quantity for which:
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