Which of the following is NOT an EOQ assumption?

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Study for the Taitt Supply Chain Management Exam 1. Utilize flashcards and multiple choice questions, each with hints and explanations. Prepare thoroughly for your exam!

Multiple Choice

Which of the following is NOT an EOQ assumption?

Explanation:
The EOQ model is built on steady, known demand and a balance between ordering costs and holding costs, with inventory never running out. Constant demand and a fixed cost per order fit this setup, and no stockouts is also part of the standard assumption—you don’t let inventory dip below zero. If stockouts were allowed, you’d have to incorporate shortage costs or backorders, which changes the model away from the classic EOQ. So, saying stockouts are allowed is not an EOQ assumption.

The EOQ model is built on steady, known demand and a balance between ordering costs and holding costs, with inventory never running out. Constant demand and a fixed cost per order fit this setup, and no stockouts is also part of the standard assumption—you don’t let inventory dip below zero. If stockouts were allowed, you’d have to incorporate shortage costs or backorders, which changes the model away from the classic EOQ. So, saying stockouts are allowed is not an EOQ assumption.

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