If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?
A) The EPQ model produces a higher total annual cost.
B) The maximum inventory level is lower under the EPQ model than under the EOQ model.
C) Both models use the same formula to compute annual ordering cost.
D) The inventory depletion rate is the same for both models.
E) The two models use different formulas to compute annual holding cost.

Question

Quizplus · Accepted Answer

The EPQ (Economic Production Quantity) model typically results in a lower total annual cost compared to the EOQ (Economic Order Quantity) model when production is involved, as it accounts for the production rate, which can lead to more efficient inventory management.

If the Costs (S and H) and Demands (D) Are