Figure 7-1
Use the graph below to answer the question(s).

-If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the model,the average amount of inventory on hand
A) is zero
B) is affected by the amount of product cost
C) is one-half of the economic order quantity
D) is smaller than the holding cost per unit
E) cannot be determined from the given information

Question

Figure 7-1
Use the graph below to answer the question(s).
 
-If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the model,the average amount of inventory on hand
A) is zero 
B) is affected by the amount of product cost 
C) is one-half of the economic order quantity 
D) is smaller than the holding cost per unit 
E) cannot be determined from the given information

Quizplus · Accepted Answer

The average inventory on hand when ordering the economic order quantity (EOQ) is half of the EOQ, as EOQ assumes a constant usage rate and replenishment when inventory reaches zero.

Figure 7-1 Use the Graph Below to Answer the Question(s)