CAF-5 · Chapter 16 · Question 10 of 10
Which of the following is a practical limitation or underlying assumption of the basic Economic Order Quantity (EOQ) model?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) It assumes that the purchase price per unit remains constant regardless of the order size.
Explanation
The basic EOQ model relies on several rigid assumptions to work smoothly: demand is known and constant, lead time is known and constant, and the purchase price per unit does not change (i.e., it ignores bulk discounts).
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