Which of the following is an assumption of the basic fixed-order quantity inventory model?
A) Lead times are averaged.
B) Ordering costs are variable.
C) Price per unit of product is constant.
D) Backorders are allowed.
E) Stock-out costs are high.

Question

Quizplus · Accepted Answer

The basic fixed-order quantity inventory model assumes that the price per unit of product is constant, which means that the cost of inventory remains consistent. The other options may vary in the model and are not assumptions. Lead times may not always be averaged, ordering costs may vary depending on the order quantity, backorders may not be allowed, and stock-out costs may be low or not considered at all.

Which of the Following Is an Assumption of the Basic