ACCA FM · Chapter 4 · Question 4 of 12
Which of the following is an assumption of the basic economic order quantity (EOQ) model?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Demand is known and constant throughout the year
Explanation
The basic EOQ model assumes constant and known demand, a constant purchase price (no bulk discounts), constant ordering and holding costs per order and per unit, and no stockouts with a known lead time. Bulk discounts can be evaluated separately but are not part of the basic formula.
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